How to Have Successful Integrations Between Companies
Integration planning succeeds if you have successful buy-in from both sides of the deal. No matter how positive your financial feasibility analysis, if you cannot get people to work together, the integration will not deliver the results you want. When you're aligning methods or connecting multiple units' functions, you can expect numerous starts and stops. For a smooth integration, both companies need to commit to the following.
Have everyone adopt an agile mindset
Focusing on reaching an agreement and having honest conversations around the main objectives will foster an agile mindset. When all parties can speak openly about the deal, you can get things to move forward even if you haven't exchanged signed agreements.
This approach to integration builds momentum and creates meaningful relationships across teams. As such, you get everyone genuinely on board. Integrations like these allow teams to break out of their silos, assess their progress, and tackle problems collaboratively.
Focus on alignment and compatibility
Change management has unique challenges. For the most part, though, you could expect transitioning companies to have the same needs as other types of businesses. For example, early in the deal's lifecycle, the buy-side should complete a compatibility matrix. This document lets all parties see where the company has misalignments and enables the acquirer to name critical differences. Doing this allows them to adjust to each other.
Also, refrain from utilizing earnouts. You don't want to fix your teams on a goal that proves impractical in the long run. Although holding people accountable is vital in any business, earnouts are not the best way to achieve that. These do not let you change tactics when unexpected events (like COVID-19) come up.
Take the long view on things
Similarly, you must focus on overarching goals during an integration. From the sellers' perspective, it means talking about long-term goals and how they can continue after their transition team bows out. Aside from this, the seller must focus on the long-term effects the integration has for employees who are staying.
When focusing on the long view, the acquirer must overinvest. From the buyers' perspective, taking a long view could mean enlisting the integration team's help in assisting the acquired company and helping it get its bearings. The buyers could involve the transition team in sustainably scaling the new company.
Have the integration team stay on longer
Traditionally, integrations wrap up at the six-month mark. However, it's better for the acquired company if the integration team stays on a little longer. Throughout the transition, they should keep their meetings and interactions as regular as possible. Doing this lets the acquired teams get a better sense of how to proceed when they are on their own.
The integration team should also advocate for the acquired company. They should assist the acquired teams, helping them "learn the ropes" at their new company. Having the team stay on for 12 to 18 months is ideal; it removes the pressure of keeping to a timeline and lets both teams lay the groundwork for future success.
An integration succeeds or fails on the strength of the transition team. To help make the process smoother, the acquiring and acquired companies must plan and align their projects for the next year and a half. That way, the new team will have enough lead time to settle into their new roles and their new company.
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