In the business arena, no single business can stand without the help of another. Mergers and Acquisition integration is the process that is composed of different transactions like a merger, an acquisition, a consolidation, management acquisition, purchase of assets and tender offers. All these involve two companies where in one company provides an offer to buy the other which may include all its assets or just a part of it. Both parties should have a clear understanding regarding internal transactions to have a better and longer integration plan in place.
So what does all these technical terms mean?A merger is when both board of directors of two companies are in agreement to combine assets and is approved by the shareholders. After a merger happens, the company that was acquired will no longer exist, but will become a part of the company that did the acquiring. An acquisition, on the other hand, is the acquisition of a company’s majority assets but the structure remains unchanged. Both companies can retain their names and the form of organization. A consolidation happens when stockholders of two companies approve a consolidation resulting in the creation of a new company. All stockholders will receive common equity shares in the newly formed company.
What are the best practices in merger and acquisition integration? When one company acquires another company, it is crucial to the success of the business to follow the best practices in acquisition integration.
1. The first thing you have to remember is that you have to move quickly because everybody is expecting changes to happen.
2. Communicate early and frequently. Formulate an integration plan for the first 100 days and make sure that the “non-negotiables” are spelled out and are understood. You do not only communicate with employees, but you also need to talk to customers and suppliers.
3. Create a strategic plan for all decision making.
4. Focus on the company’s priorities.
5. Establish a framework for measuring employee performance as early as possible.
6. Assign integration resources.
Remember that the key steps in an acquisition integration are to align strategy, identify culture, dedicate resources, create action plans and execute all these in a smooth yet professional way. There should be a timeline for aligning your strategy and your people in order for the integration to run smoothly or risk confusion among employees, clients, and suppliers. All factors that may affect the transactions should always be looked upon to prevent higher risks.