Closing an M&A deal is a significant achievement, but it’s only the beginning. What happens after the deal is just as important—if not more—than the deal itself. Effective post-merger integration (PMI) is critical to ensuring that the merger lives up to its potential and delivers the expected value.

Poor M&A integration can undo months of hard work and strategic planning, leading to missed synergies and underperformance. If you want your acquisition to meet or exceed expectations, developing a strong post-merger strategy is essential.

This guide will walk you through how to plan for post-acquisition integration in 2024, helping you avoid common pitfalls and maximise the value of your M&A transaction.

What is Post-Merger Integration?

Post-merger integration (PMI), also known as post-acquisition integration, is the final phase of the M&A process. It involves blending two or more companies by aligning their operations, procedures, and cultures to achieve maximum synergy and value. PMI ensures that the strategic goals of the acquisition are met.

Why is Post-Merger Integration Important?

Research indicates that between 70% and 90% of M&A deals fail to achieve their projected benefits. This high failure rate shows how crucial it is to approach M&A deals cautiously and with proper planning.

According to McKinsey, 1 in 6 dealmakers feel unprepared for the integration process, even when they believe they are ready to acquire. The same report highlights that companies with successful PMI achieve 6-12% higher growth rates than those that struggle with integration​.

A well-executed post-merger integration strategy can unlock hidden synergies and help your business realise the full value of the deal faster. To get it right, you need a step-by-step expert support system to ensure that the deal creates value and aligns the merging entities smoothly.

Key Steps to a Successful M&A Integration Strategy

Step 1: Form Your Integration Team

The integration process requires a unified and skilled team that can execute the strategy effectively. Choose employees from both companies to create a diverse team with deep insights into different business functions. Appoint integration leaders who are experienced in managing cross-functional teams and can maintain the momentum.

Step 2: Create a Detailed Integration Strategy

Developing a clear and detailed integration plan is crucial. This plan should include well-defined value drivers, objectives, and a timeline for achieving the merger’s strategic goals. Kick off the process with a strategic meeting to clarify these goals and discuss the synergy areas that the acquisition aims to achieve.

Step 3: Organise M&A Integration Activities

PMI touches every department, from human resources and finance to sales and IT. Organising these activities into functional categories helps you monitor and track progress across different areas of the business. Using integration management software like DealRoom can centralise communication and keep everything on track.

Step 4: Maintain Momentum

Momentum is key in post-merger integration. Distractions or delays can lead to lost synergies and inefficiencies, so it’s important to set clear deadlines for each stage of the process. Keeping the team focused on these goals is essential to avoid dragging out the integration.

Step 5: Set Clear Exit Criteria

To ensure the integration team remains on track, set clear exit criteria for each department, such as finance, operations, and HR. Exit criteria will act as a measurable goal for the team to work towards, helping them know when the integration is complete and successful.

Best Practices for a Successful Post-Acquisition Integration

1. Start Planning Early

Planning for post-acquisition integration should begin well before the deal closes. From day one, focus on identifying value creation opportunities and synergy drivers. Having an early start allows you to spot potential roadblocks and plan for them.

2. Support Your Team

The integration process can be challenging and demanding. It's essential to provide your team with the necessary resources and support to avoid burnout and inefficiencies. Consider engaging an M&A advisor or integration consultant to ensure a smooth process.

3. Prioritise Communication

Effective communication is the backbone of any integration strategy. Establish clear communication channels across departments and encourage transparency. Use integration platforms to centralise communications and ensure that everyone is on the same page.

4. Leverage M&A Tools and Software

Using specialised M&A tools like Foundy’s deal management platform or DealRoom can improve efficiency. These tools help streamline processes, track progress, and centralise tasks and documentation, making the integration process smoother and more organised.

5. Use a Post-Merger Integration Checklist

A post-merger integration checklist can act as a roadmap to keep your team focused and ensure that critical steps are completed. This checklist should include key activities such as system integration, cultural alignment, and financial consolidation.

Exit Strategies for Founders in 2024: Why M&A is a Strong Option

In 2024, the M&A market continues to be a popular exit route for founders. With increased demand from strategic buyers and private equity firms, the opportunities for founders to sell their business at strong valuations remain high. The global M&A market has shown resilience in the face of economic downturns, with deal values continuing to grow.

Post-acquisition integration is often the most challenging part of the M&A process, but it’s also the key to unlocking the value that prompted the deal in the first place. Without a well-structured plan, even the most promising acquisitions can fall short.

In 2024, with the tools and resources available, founders can ensure that their integration strategies are comprehensive, adaptable, and positioned for success. At Foundy, we understand the complexity of post-merger integration, and offer specialised M&A advisory services to help you through every stage of the acquisition. Our Triangular Model, which combines AI-powered insights, access to over 1.1 million transactions, and expert advisors, helps ensure smooth integration and the best exit outcomes.

We focus on tailoring strategies to specific industries and business needs, giving founders access to actionable data-driven insights. If you’re considering an acquisition or preparing for post-merger integration, Foundy is here to guide you. With step-by-step expert support, industry-specific advisors, and a wealth of data, we help founders navigate the complexities of M&A to ensure smooth and profitable outcomes.

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Running a business and deciding to sell or acquire another can feel like having two full-time jobs. While some business owners thrive on the excitement of buying and selling on their own, many, including myself, benefit from collaborating with experts who bring more sector specific experience. However, it’s important to note that working with M&A advisors is not a one-size-fits-all solution. Hence why we built our advanced portal and Find An Advisor programme to empower you with the tools, education and relevant expert support to help you navigate the end-to-end process and secure a higher valuation.

Check out the free calculator on our pricing page, which shows you the six to seven figures in additional share value Foundy can provide your business.

No matter where you are on your business journey, connect with Foundy to access the resources needed for a smoother acquisition or sale process.