Post-merger integration
Post-merger integration or PMI is a complex process of combining and rearranging businesses to materialize potential efficiencies and synergies that usually motivate mergers and acquisitions. The PMI is a critical aspect of mergers; it involves combining the original socio-technical systems of the merging organizations into one newly combined system.
Overview[edit]
The process of combining two or more organizations into a single organization involves several organizational systems, such as assets, people, resources, tasks, and the supporting information technology.[1] The process of combining these systems is known as 'integration'. Integration Planning is one of the most challenging areas to address pre-close during a merger or acquisition.[2][3] Even though culture clash between companies can cause integration problems, only 4% of the executives in a survey by Pritchett, LP reported that their organizations include culture-specific questions in their due diligence checklists.[4]
The integration management office, or IMO, manages core functions of the integration effort and provides structure for integration delivery.[5] In a survey by Global PMI Partners of 143 M&A executives, 67% of respondents incorporate IMOs during an acquisition on at least half of their initiatives in a cross-border setting.[6]
Integration often requires a daunting degree of effort and coordination, but when done well, companies may deliver as much as 6 to 12 percentage points higher total returns to shareholders (TRS) than those that don’t.[7]
Organizational lifecycle[edit]
Integration fits within an organizational lifecycle or specific business mergers and acquisitions cycle where businesses buy, integrate, then dispose of businesses:
- Definition of vision & strategy
- Selection of growth method: organic vs inorganic
- Target identification
- Pre-deal evaluation & due diligence
- Negotiation & deal completion
- Post-merger integration
- Acquisition integration
- Ongoing improvement
- Disposal
See also[edit]
- Mergers & acquisitions
- Business acquisition
- Program management
- Project management
- Change management
- Corporate finance
- Management due diligence
References[edit]
- ^ Anthony F., Buono; Bowditch, James L. (1989). The human side of mergers and acquisitions: Managing collisions between people, cultures, and organizations. San Francisco: Jossey-Bass Publishers. ISBN 1-55542-135-0.
- ^ "Merger Integration Due Diligence". Dr. K.M.Popp. Retrieved 2014-07-21.
- ^ M&A Transaction Survey of 50 executive M&A respondents (2013); ModalMinds Inc.; http://modalminds.com/modality/ma-transaction-survey-results/
- ^ Pritchett LP (2018), Corporate Culture: The "X Factor" in Merger Success and Failure; https://www.mergerintegration.com/corporate-culture-x-factor-merger-success-and-failure
- ^ Hofmeyer, Stefan; Whitaker, Scott C.; et al. (2016). Cross-Border Mergers and Acquisitions. Hoboken, New Jersey: John Wiley & Sons, Inc. ISBN 978-1-119-04223-5.CS1 maint: Explicit use of et al. (link)
- ^ Global PMI Partners, Cross-Border M&A Integration Survey, November 2015; http://www.gpmip.com
- ^ Doherty, Rebecca; Engert, Oliver; West, Andy. "A Billion Dollar Successful Separation". Transaction Advisors. ISSN 2329-9134.
