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Over 80 percent of mergers fail due to poor planning and delays. Some of the biggest causes behind poor planning are a lack of strategy, unclear vision, inept mindset, invasive culture, and most importantly lack of data understanding.
Companies must have a proper post-merger data integration strategy that they can implement without exceptional delay once the merger takes place. Mergers take time, often months, and it is up to the integration managers to draft the plan way before it is in the final stages.
A lack of proper M&A integration strategy not only leaves employees clueless but also creates cultural issues that can lead to a regressive work environment. These problems can lead to high employee turnover and an uncertain outlook of the organization.
Any M&A integration is marred by challenges that can disrupt the smooth functioning of the processes of the merged companies. Companies must take into account these challenges from the start and try to solve them.
Some major challenges that can cause a hindrance in M&A strategy include:
When two companies are merged, their processes are revamped. Since previously both the companies had a distinct work culture, when they are merged, a single culture prevails. However, having a unified culture is one thing and its acceptance by the employees is another.
Change management must keep a record of all the mishaps that occur during the first few months after the M&A is complete and creates a work environment that can cater to the employees of both the companies.
One of the biggest reasons for post-merger integrations is lack of employee engagement. After a merger, a change of management takes place and this new management is unsure of their capabilities.
Often cultural lagging exists among employees from both sides that bar them from working together in a unified environment. On top of that, management creates unachievable goals and pushes the employees to go after them without offering a clear plan.
As a result, trusted employees become uncertain of their future in the organization and start to leave.
Mergers and acquisitions can directly hit the bottom-line of any successful company. Every business has its own ways of customer management and that’s how it acquires and retains loyal customers.
However, post-merger these customers may be the same way they were before. As a result, retention rates drop. This usually happens because the new management is unsure of how to handle incoming customer segments.
The change management leaders should create an integrated strategy for linking the customers to the new customer management teams. This is only possible when the company has a CRM with specific details of customers from the newly acquired subsidiaries that the customer management teams can understand.
Conflicting interests are another major reason why most M&A integrations fail. The new management of the company is made up of managers from both organizations. Now, where one company was focused on increased customer acquisition, the other was focused on more profits. This inconsistency in the vision of both businesses creates a conflict of interest after the merger takes place. As a result, the company stops achieving its yearly goals.
Successful M&A managers know the importance of having an integration strategy from the very start. Let's learn the elements needed for creating a sustainable post-merger integration plan.
Select M&A Integration Leaders
Successful leaders test and implement their strategies. They don’t blame their teams for flawed plans because they themselves are leading the implementation.
When creating an M&A integration strategy, select execution leaders from employees who have a can-do attitude. McKinsey suggests that the post-merger leaders should be corresponding with merger experts to get the training they require for successful business operations.
The integration managers should be allowed to select teams of their choice. When managers create their own teams, they are more likely to gel with them. This alignment makes the team proactive and leads to better information exchange between both sides pre-merger.
Post-integration teams should have a deadline for all the projects they take under their command. Without proper deadlines, it becomes harder to measure the progress of the project and often the projects are never completed before the merger commences.
Change of infrastructure can cost millions of dollars. However, during a merger or acquisition, companies are already integrating their data. So, this is the right time to revamp legacy infrastructure.
fact, post-merger experts recommend doing away with redundant legacy systems to make way for modern, robust infrastructure during the merger period to improve business performance in the long term.
Many post-merger data integration tools exist today that can help the change management teams easily integrate data from multiple departments to the new systems without manual entry.
Merger leaders have to combine data from business units such as sales, marketing, product, manufacturing, logistics, and inventory from both the organizations.
If they build tools from scratch for combining this data, it can take months before the tool is ready to be deployed, and post-merger integration can get delayed.
Automated M&A integration tools allow companies to easily integrate post-merger business data autonomously. For example, Astera Centerprise is a post-merger integration tool that allows data automation. Users can select data sources from both the organizations using pre-built connector APIs and create workflows.
Once the data is properly mapped in the workflow, it can be scheduled using the integration tool. Now, when new data is added to the sourced systems, it will be automatically moved to the destination without assistance from the user.
For example, the post-merger integrators want to unify CRM data from both the business units. One company has a built-in CRM system while the other one uses a cloud application.
With Centerprise, they can add both CRMs as sources in the data staging area and create a data map for loading it to the destination after adding transformations like sort, merge and filter.
Finally, the teams should have a monitoring and evaluation plan in place so that integration is properly monitored throughout the merger process. Each business unit should have one evaluator who can report their findings to the change management leadership so that decisions can be taken on an ad-hoc basis.
Now that you have a plan ready for post-merger integration, it is important to learn about the best tool in the market that can simplify M&A processes and improve data consolidation.
Astera Centerprise builds a consolidated view of your data after a merger or acquisition. Whether you are merging customer records, marketing data, or financial insights from the merged business units, Centerprise can help you design an automated pipeline for all your cross-enterprise data integrations.
To get started with post-merger integrations, visit Astera.com.
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