Maximizing the benefits of M&A is an elusive goal even under favorable economic conditions, but today’s business picture is very volatile, so entrepreneurs need to pay special attention to a plan to maximize the benefits of the deal. If you are not able to integrate the companies quickly after the deal is done, you will be in trouble. An integration strategy is a complex process on which the fate of the merged companies depends, and in this article, we will look at how to make it more successful.
Integration often depends on the type of deal
For your integration strategy to be successful, you need to include all of the companies involved in the deal in your plan, dividing the entire strategy into its parts for specific areas of the company. There is no specific algorithm for what to do in such a case, all elements of this plan often change and vary depending on your unique situation.
Also, business owners should plan degrees of integration by function and geographic region. Every deal is unique, but they can all be categorized in one way or another into the following four types:
- Separate transactions-in this case, the company that was acquired perfectly complements the parent company’s core business, but if you try to integrate it into the system itself it will disrupt the entire course of the business. In that case, to successfully integrate the acquisition, you need to gain control of its cash and separate all operations
- Tightening deals are deals in which the acquiring company acquires several smaller companies to expand its resources and get the technology it needs. They can seamlessly merge into the main company and expand their market opportunities, but you need a complete and clear strategy to make this possible
- A takeover deal – In this case, the company acquires an asset that operates in the same field or provides similar services. This is done to create powerful and lasting synergies. This transaction also requires complete integration and may develop at different speeds in different areas of business
- Transformation deals – in this case of a transaction, the subsidiary completely changes its essence. For the integration to go smoothly and be successful, companies need to work closely together, to achieve a mutual understanding of the integration strategy
The integration strategy and target operating model
There are many factors to consider when developing an integration strategy, as well as accepting trade-offs. In addition to clarifying the cost of the merger and acquisition, both partners should also discuss and clarify the following to bring clarity to the integration process:
- The degree of control the buyer will want to have over the seller’s operations
- What are the differences and similarities in the business models of both companies, the services and products they offer
- How much the integration will slow down the normal operation of the company
- How the effects of integration will affect your employees and business culture
- How to streamline and re-organize customer relationships of both companies
- The importance of synergies, how to trigger them
Approval of the integration plan will allow you to define and begin to shape your target operating model for the business. For the integration planning and process to go as smoothly and efficiently as possible, many companies use virtual data rooms. VDRs were created to help manage and simplify all phases of an M&A transaction. These solutions contain all the necessary tools for effective collaboration and cooperation, document management, and secure data sharing. You can find the best VDR offerings at datarooms-review.com.