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Following the acquisition of an acquired company by the buyer company, the process of integrating the functioning of both the companies in order to produce optimum financial synergy is what is known as Acquisition Integration.
The problem that is often faced by companies in relation to Acquisition Integration is that they spend all their resources in effectively acquiring the target company. Once the actual acquisition is completed, the companies are forced into a high-pressured situation in which they are to complete the integration process.
If the companies wish to carry out the integration process in a smooth manner, it is necessary that they formulate effective checklists and templates that clearly map out the subsequent steps to be carried out.
Acquisition Integration in companies may take anywhere between a couple of months to several years in order to be successfully completed.
Acquisition Integration Checklist
To carry out the effective integration of a freshly acquired company into another, it is a requisite that the matters at hand be adequately reviewed, prioritized and proceeded with.
In order to ensure that all the priority areas are covered, most companies create an Acquisition Integration Checklist. These integration checklists cover all the primary functions and operations to be carried out by the companies.
Few of the key matters usually covered by the checklist are as follows:
Finance and Control
In order to avoid any unpleasant surprises that may spring up due to the poor reporting on part of the acquired company, it is advised that financial and control department follow the instructions and templates provided and submit a complete financial report.
Matters such as hand over from due diligence, group accounting and Statutory reporting, control of management, implementation of accounting rules, customer financing, tax integration and so on all have to be addressed adequately.
HR and Personnel
The HR management, post-acquisition, usually lands with the buyer’s HR team. They have several responsibilities to ensure effective integration.
Some of these are:
- Participation in planning and managing the integration.
- Holding welcome meetings and informal social events when the deal is announced.
- Organizing an effective communication structure.
- Scheduling and communicating meetings to all the members.
- Arranging a two-way link between the acquired company and the buyer company so as to facilitate the transfer of knowledge.
- Addressing any individual grievances that may have been caused due to the sudden change in the management.
Depending on the size of the acquisition, the local teams may be required to carry out integration functions.
Acquisition of one company by another is bound to cause several management issues. In such circumstances, it is necessary to keep the morale of the employees high in order to ensure effective integration.
It is wrong to presume that the function of the legal department ends when the acquisition is completed. Several aspects such as acquisition of minority shares and formation of joint ventures must all be taken into consideration separately.
Further, the terms and conditions of agreements such as stock purchase agreement and the asset purchase agreement must all be made clear to the finance department of the buyer company in order to deal with any issues that may arise at a later date.
The integration of the procedures and practices of the communication practices between the two companies takes a lot of planning and consideration.
Sales and Marketing
The fact of the matter is that the sales and marketing strategies of each company varies widely from that of other companies. It is necessary to take extreme caution while proceeding with matters such as key customer retention and keeping up the momentum of the on-going sales.
Technology and R&D
Technology and R&D are generally deeply rooted factors in a company. The importance of technology and R&D at the time of Acquisition Integration depends on the purpose of the acquisition and whether the same was done in order to obtain the technology of the acquired company. Either way, the integration of the said technology is a complicated and equally important part of integration.
There are other factors that find their place in the Acquisition Integration Checklist such as culture, after sale service, supply chain management, production, and synergy and so on.
Acquisition Integration Template
The Acquisition Integration Template is primarily a guideline of sorts that lays out the stages that constitute the integration of the Acquired Company and the Buyer’s company. Each company may create templates according to their necessity and requirements, in a manner most suited for the company.
The templates are usually appealing to look at and extremely informative, presented in the form of a table or a chart. The primary goal is to equip the management as well as the executives with sufficient tools, techniques and templates so as to facilitate a smooth integration of the companies.
As stated above, templates can be of different forms, as long as it solves the primary purpose of providing guidance. A popular form of template is primarily prescribed with 5 stages of integration.
These 5 stages include:
- Pre- planning: Usually carried out at the time of acquisition. The management is required to foresee the duties and responsibilities that will be bestowed on them once the acquisition is complete and act accordingly.
- Integration Due Diligence: post-acquisition due diligence more often than not, plays a pivotal role in the integration process.
- Integration office planning
- Execution of the integration plans
- Wrap up
The 5 stage template, however, is a very basic form of a template. As has already been stated, the function of an Acquisition Integration Template is to provide a neat framework within which the entirety of the integration process is fitted in. it takes care of all aspects such as assigning accountability, tracking progress, tracking time for the completion of each task and so on.
When the acquisition is large scale, a simple 5 stage template will not work. Extensive templates covering several aspects assigned to is researched and organized so as to fit the bill and allow for an easy integration. Having hundreds of aspects integrated into the template allows for the companies to prescribe all existing tasks in the template, so it satisfies its duty as a comprehensive framework for integration.
Acquisition Integration or post- merger integration is a major part of an acquisition, which is more often than not over looked by companies before the acquisition is completed. This leaves the companies suffering when the integration process actually begins. That is where the checklists and the templates come in to save the time and resources of the management of the companies.