Integration: The Critical M&A Success Factor

AuthorWilliam H. Venema
Published date01 May 2015
DOIhttp://doi.org/10.1002/jcaf.22046
Date01 May 2015
23
© 2015 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com). DOI 10.1002/jcaf.22046
This article was originally published in Volume 23, Number 2 of The Journal of Corporate Accounting and Finance.
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William H. Venema
Numerous studies
have concluded
that most mergers
and acquisitions fail to
meet the expectations of
the purchasers. It is clear
that the due diligence,
valuation analysis, and
negotiation that precede
the closing of a transac-
tion cannot guarantee its
success. Instead, the syn-
ergies and assumptions
that supported the deci-
sion to acquire a business
(a “Target”) will be real-
ized only if the purchaser
effectively integrates the
Target. Unfortunately,
many purchasers either fail to
plan the integration of the Tar-
get adequately or conduct the
integration process too slowly.
A corporation should never
buy a business without a clear
concept of what it plans to do
with the Target following clos-
ing. Accordingly, integration
planning should begin as soon
as a Target is identified, by
naming a steering committee
of relevant senior executives to
oversee the integration effort.
The steering committee should,
in turn, appoint a responsible
person from the business unit
or corporate department that is
most directly involved with the
Target (the “Integration Liai-
son”) who should be involved
throughout the entire acquisi-
tion process and who, under the
supervision of the steering com-
mittee, should be responsible for
preparing and refining the inte-
gration plan up until the closing.
The steering committee should
review and approve (or revise)
the integration plan, so that the
plan has been fully
vetted with all the
appropriate parties
and the corpora-
tion is prepared to
execute the plan
immediately follow-
ing the closing.
Good busi-
ness results rarely
happen automati-
cally; rather, they
are the product of
good management.
Integration is no
different. Integra-
tion plans should
be aligned with the
strategic objectives
of the transaction, should con-
sider the organization and cul-
ture of the Target, should pro-
ceed systematically and quickly
following the closing, and
should comply with the antitrust
laws. The characteristics of a
good integration plan are listed
in Exhibit 1.
ALIGNMENT WITH CORPORATE
STRATEGY
Integration planning begins
with the strategic justification
Most mergers and acquisitions (M&As) fail to meet
the expectations of the purchasers. It is clear that
the due diligence, valuation analysis, and negotia-
tion that precede the closing of a transaction can-
not guarantee its success. Instead, the synergies
and assumptions that supported the decision to
acquire a target business will be realized only if
the purchaser effectively integrates the target.
Unfortunately, many purchasers either fail to plan
the integration of the target adequately or conduct
the integration process too slowly.
The author of this article explains how to draw
up a good integration plan that will boost the
chances of M&A success. © 2015 Wiley Periodicals, Inc.
Integration: The Critical M&A
Success Factor

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