Acquisition of companies to expand the geography of sales, increase the number of customers, expand the product line or merge with an equal competitor are the most common strategies for increasing business growth following post-merger integration process steps.
The Performance of Post-Merger Integration Process
Merger integration processes are notorious for being complex and multi-staged. In addition, the difficulty usually lies in the fact that two businesses are trying to build a trusting relationship, constantly collaborating and communicating with each other in order to close a deal. But what is the use of approving and closing an owned transaction? Right now companies have to share their own employees, responsibilities, losses, and profits, but before that they have to go through a post-merger integration, and in this article, we will all tell you exactly how that happens.
From a technical standpoint, the merger had huge potential, as the two companies specialize in different areas of the automotive market, have two distinct product portfolios, and are located in two complementary regions. However, the structural and financial benefits of the deal proved irrelevant when the two companies failed to find a way to operate productively in the face of competing for cultural identities. The investment component of the concept speaks of the directions for using resources to achieve the company’s strategic goals.
Each enterprise strives for prosperity, development of its business, defining its strategic tasks that need to be solved, and it is to achieve these goals that the company really evaluates its competitive advantages and disadvantages. Firms try to keep the identified strengths, developing them to the extent possible, and get rid of the weaknesses or at least minimize them. Companies seek to achieve the desired results by resorting to business combinations.
Accordingly, the plan of the post-merger integration process of companies should be formed, first of all, from the strategic plan of the corporation, that is, there should be an organic combination of the company’s goals and the plan for mergers or acquisitions of enterprises. A related or conglomerate merger is an association of companies with a similar strategic policy operating in the same sector of the economic space but producing different types of products. Such firms are linked by the underlying technology, market niche, and/or the same production process.
What Are 6 the Main Post Merger Integration Framework Process Steps?
Poorly thought out or inappropriate business strategy is one of the most frequently cited reasons why post-merger transactions often fall short of their expectations. Oddly enough, a number of post-merger textbooks do not sufficiently highlight the critical role that planning must play in a business combination. In this regard, the author proposes to consider a planned approach to mergers and acquisitions, when post-merger activities are viewed as a complex process consisting of interrelated stages.
Among 6 the main post-merger integration process steps are:
- Start integration as soon as the deal is announced.
- Select integration team members.
- Plan the integration structure.
- Create an internal communication plan.
- Keep the overall message consistent.
- Establish clear exit criteria.
In a narrow sense, a post-merger integration process is understood as the transfer of all rights and obligations of two or more participants in the integration process to a new legal entity, which is formed as a result of the reorganization. In turn, the takeover is the termination of the activities of one or more legal entities with the corresponding transfer of all rights and obligations to another company.