Why is experience so critical in managing business integration?

Integrating a business, merging an acquisition or creating a joint-venture are activities that most executives experience infrequently in their careers, and consequently they seldom have the necessary critical skills or experience needed to make the venture successful. As a result many attempts at creating shareholder value by bringing two companies together fail: two separate studies concluded that “61 % of mergers failed to earn their cost of capital or better on funds invested” and “58% of companies had a lower total shareholder return 24 months after the merger announcement, compared with three months before” .

Behind these failures one almost always finds that some key aspects were not managed effectively, for example:

• there was no clear, agreed, quantified vision for the combined business
• insufficient attention was paid to the people issues - both in understanding how the critical people skills drive value and in clarifying future roles, structure and policies
• the integration process was not sufficiently planned or detailed
• the specific issues and risks related to the actual integration program were not properly identified and managed

Scope

PSM have supported over 20 successful integration programmes in the past few years. The wealth of experience thus generated has enabled us to hone a robust, proven approach to help clients successfully plan and realize a complex business integration. PSM's role typically includes the following key tasks:

• ensure there is a common vision
• create the integration programme, focusing on policies, people and process
• manage the integration programme to allow the client to concentrate on addressing the issues and realizing the benefits
• act as an external sounding board and coach for managers
• provide specific functional or business expertise directly, and help manage other specialist inputs

Sometimes the deal is subject to approval from the appropriate regulatory bodies. In such cases the two companies may be compelled to continue trading as separate entities (with restricted information sharing) until approval is forthcoming. We overcome the delays that accompany regulatory investigations by setting up and running ‘clean rooms' where detailed integration planning can take place without the need to share commercially sensitive information between the two organisations.

Competences:

PSM has built a unique set of skills and competences in integrating business ventures that allows us to deliver concrete benefits for our clients:

• Speed: We help you complete the integration program faster and secure the synergy benefits earlier
• Scale: We help you achieve benefits that are often exceeding the original expectations
• Effectiveness: We help your own integration team work more effectively thanks to our coaching and guidance

Furthermore, PSM's consultants have worked in most parts of the globe and in numerous multicultural engagements. This allows us to handle differences in socio-business cultures, which can have a major impact on the success of multinational integration programmes. We are familiar with and sensitive to the cultural norms across business sectors in the following regions/countries:

• Eastern and Western Europe
• North America and Mexico
• South America
• Middle East and Southern Africa
• Japan, Korea, China, Singapore, Malaysia, Indonesia, Thailand & India

“You have only one chance to successfully integrate two businesses – there is no option to learn and try again”