Tuesday, June 29, 2004

The Drivers of Success in Post-Merger Integration

A merger, integrating two relatively similar-sized companies, is a difficult process (more difficult than an acquisition). Many mergers fail. Everybody knows that. Marc J. Epstein thinks there are seven determinants of merger success: 1. strategic vision 2. strategic fit 3. deal structure 4. due diligence 5. pre-merger planning 6. post-merger integration 7. external environment.
Epstein claims the factors 5 en 6 have enjoyed relatively little attention and recommends best practices for PMI, which he calls the five drivers of successful post-merger integration:
I. Coherent Integration Strategy (reinforcing this is a "merger of equals")
II. Strong Integration Team (discrete, full-time function with ample resources and strong leadership)
III. Communication (significant, constant and consistent)
IV. Speed in Implementation (planning is essential, majority of that should be ready before the announcement of the merger)
V. Aligned Measurements (with the merger strategy and vision, including targets and milestones, financial and non-financial, long term)
I enjoyed reading this article and recommend it to people involved in a merger. You can order it by emailing reprints@elsevier.com.