Post-Merger Integration Checklist: Discover Key Steps to a Seamless Transition

PWC has found that 60% of CEOs will accelerate M&A activities in 2023. Additionally, over 90% of M&A and private equity leaders achieved desired outcomes with transformation deals and post-merger integration (PMI) in 2022. Still, successful post-merger integration requires careful planning. 

This post describes the importance of integration planning and provides recommendations for smooth integration. Keep reading to discover the PMI place in the M&A timeline and get a comprehensive post-merger integration checklist.

What is post-merger integration?

The deal closure is just the tip of the M&A iceberg. According to Ernst & Young, the post-merger integration process is the biggest challenge among all M&A activities.

Post-merger integration (PMI) is when two companies combine resources, technologies, people, and business functions to maximize the value of the merger.

In successful acquisitions, PMI activities center around a detailed integration checklist plan. A post-acquisition integration checklist is a multi-step guideline that outlines essential PMI activities in the M&A timeline to realize integration goals.

The importance of post-merger integration

Boston Consulting Group emphasizes that companies still spread PMI activities across the day-to-day chores of their departments. 

However, putting PMI in the background is the reason why 70-90% of deals fail during a post-merger integration phase.

Fortunately, the PMI perspective has changed in 2023.

PWC’s 2023 M&A integration survey shows that addressing integration aspects helps 45% of organizations achieve significant operational success. It’s a 236% increase compared to 2017-2019 measurements.

PWC also considers a well-defined post-merger integration plan the second most important contributor to successful PMI. It allows companies to conduct wise risk management, realize synergies, and generate higher value.

Key elements of post-merger integration

One should build post-merger integration planning around the main business aspects, including but not limited to:

• Products and services – Integrating and optimizing products and services.
• Marketing – Rebranding, developing marketing strategies for shared audiences, channeling new and existing customers to the unified brand.
• Supplies – Reevaluating assets, consolidating suppliers, and optimizing procurement processes.
• Real estate – Selling redundant facilities or obtaining new holdings, relocating employees, and optimizing production facilities.
• Human resources – Optimizing employee policies, integrating HR systems, optimizing staff, etc. 
• IT systems – Optimizing, consolidating, or replacing IT systems, and migrating corporate data.
• Finances – Combining financial and operations systems, identifying and implementing financial synergies.
• Legal – Restructuring a merged entity and managing compliance, including regulatory approvals, contracts, agreements, leadership structure, etc.

M&A integration timeline

According to McKinsey, 50% of successful acquirers achieve key synergy targets within the first year. 

PWC’s research on 200+ M&A deals has found that successful dealmakers integrate first business functions three months post-deal and finish PMI within 1.5 years. Finances take the least time, while IT systems require the most effort.

Therefore, you should set PMI timelines within these timeframes and aim to complete PMI in 1.5 years post-deal at maximum. Let us get to the PMI phases in the M&A timeline.

PMI phase	Position in the M&A timeline
Pre-planning	Final due diligence stage
PMI due diligence	After primary due diligence, when both parties finalize the deal closing decision
Day 1 readiness	The first day after deal closing
Day 100	From day 100 post-deal and beyond

How to achieve successful post-merger integration?

PWC has found that a robust methodology, wise leadership, timely cultural integration, and seamless communication strategy help companies meet PMI deadlines.

Businesses must also build PMI processes around M&A due diligence team findings. As an acquiring company, you should prepare a due diligence request in advance. As a seller, you should consider these questions to ask when your company is being acquired.

Check a comprehensive due diligence data room checklist to build a robust foundation for post-merger integration.

Acquisition integration team roles and responsibilities

Successful merger requires establishing dedicated PMI management teams in advance. They include a steering committee, an integration management office (IMO), and various teams supervising particular business processes.

Post-merger integration checklist: How to implement and customize

A post-acquisition integration plan checklist facilitates deals involving two or more companies and helps executives manage the first acquisitions. One can use the checklist as a reference to keep integration teams on track and increase accountability.

An acquiring company should develop the acquisition integration checklist at an early PMI planning stage and elaborate on it as the integration progresses.

Below, you can check the PMI checklist encompassing everything from preparations to PMI closing activities. As every M&A deal comes with unique challenges, you should customize the checklist based on your workflows.

Day 1 preparation

Day 1-30

Day 30-60

Day 60-100

Day 100 and beyond

Virtual data rooms as a post-merger integration tool

Fortune 1,000 companies, mid-sized, and small businesses use virtual data rooms (VDRs) to facilitate post-merger integration. A virtual data room is a cloud workspace with dedicated M&A lifecycle management tools. 

It drives M&A deals from preliminary acquisition research and cybersecurity M&A due diligence to post-merger integration and daily file sharing. A virtual data room combines the best PMI practices and ensures continuous improvement across the entire M&A timeline:

• PMI due diligence. A secure central repository and data management tools accelerate integration research. A data room for due diligence helps PMI teams validate research findings and align post-deal integration with growth strategies.
• Standardization. Standardized document formats, version control, audit trails, and M&A workflows unify integration procedures. It drastically speeds up the process as everyone follows the same framework.
• Communication. Centralized messaging, document storage, and Q&A tools enable quick file-sharing and reduce communication silos. Tasks, redactions, annotations, comments, and other collaboration tools improve the accountability and engagement of functional integration teams.
• Cybersecurity. Bank-grade data encryption, role-based access, and document security tools provide top-notch security and compliance. A VDR leaves no room for data breaches, misused documents, or violated agreements.

The virtual data room market enumerates over 100 solutions, and selecting the right one will help a company achieve the best results. To accelerate VDR selection, one can compare key players in the VDR market and use the knowledge and experience of data room reviews.

Key takeaways

Companies should start planning post-merger integrations before M&A closing to harness acquisition benefits and survive in the long run.

For this, top executives should establish post-merger integration management bodies, like steering committees and PMI management offices. 

They should develop comprehensive integration plans to accelerate PMI and address ongoing issues as early as possible. A post-merger integration finance checklist will be the easiest to implement, while IT integration takes the most time.

To kickstart PMI and achieve integration goals, successful companies use technology solutions, including virtual data rooms. 

Category

Mergers and acquisitions

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