According to research carried out by McKinsey, every year, at least 450 high-level mergers and acquisitions are announced. Of these, 10% get shelved. 42% of these deals don’t go through because there is often a price disagreement, 14% fail because of a lack of trust, and 5% because of political headwinds. For those deals that are closed, the mergers that become successful do so because of one key component: a carefully orchestrated post-acquisition integration plan.

So, what is a post-acquisition integration plan and why is it of the utmost importance?

The 4 reasons PAI plans exist

When a merger and acquisition deal is finally closed, the ensuing step is what is referred to as post-acquisition integration or PAI. PAIs involve the rigorous process of attempting to combine as well as rearrange the merged companies in order to create profitable synergies.

There are four major reasons why PAI plans exist and these are:

1. PAI plans offer detailed preparation needed before Day One: Everything that happens prior to the merged company’s Day One must be set out in stone. Nothing should be left to chance. A successful merger is in part due to the precision taken in the seemingly minor issues. Things to establish include how communication will be in the newly formed organization and the new hierarchy and structure of things. A good business broker will highlight more areas you shouldn’t overlook.
2. PAI plans outline Day One strategy: The first day for the merged business is a historical moment that requires proper planning. It’s advised to create an hourly plan. On this day, employees from both sides will have the opportunity to meet. In order to ensure a smooth transition, plan this day step-by-step.
3. PAI plans establish a course of action for future actions: Because of their complex nature, PAI activities require precise planning. Failure to properly co-ordinate between the two entities will see problems begin to emerge such as brand dilution, responsibility conflicts, and IT incompatibility.
4. PAI plans ensure the merged company continues to be profitable: When buying a business and drafting up a merger proposal, an anticipated end-goal is the continued profitability of the merged company. One of the key selling points that oftentimes wins people over to the idea of merging is the potentially lucrative gains and returns to be made. And these require a well-thought-out PAI strategy.

What to include in a PAI plan

When looking at a PAI plan, what are the aspects that make it ideal or a good strategy? It must be remembered that no two PAI plans are similar because each M&A deal is unique to the companies involved. With that said, Sun Acquisitions can help you to build a comprehensive and tailored post-acquisition integration plan for your situation.

However, on a simplified scale, every PAI plan will factor in three main components: people, technology, and content.

1. People: Your custom PAI plan should be managed by a competent integration team. The roles and responsibilities of each person in the newly merged company must be distinct and their part in the integration made clear to them. Everyone must be aware of the need to be involved.
2. Technology: The IT departments must be sensitized and on top of their game in providing on-demand integration reports. Additionally, the software and tools adopted for use must be user-friendly for all.
3. Content: Manuals were people can refer to their roles, responsibilities, the goals for the new company and protocols to follow and observe must be readily available. The integration plan must be concise for the employees to follow.

Do you need help with your PAI plan?

Do you need post-acquisition integration support? Sun Acquisitions can help. We are happy to consult with you regardless of the stage you’re at with your merger – pre-acquisition or post-acquisition. Our PAI experts have decades’ worth of experience helping businesses in their M&A initiatives.