CHAPTER 2 SETTING UP POST-MERGER INTEGRATION PROCESS
2.3. Setting up Post-merger process for M&A consulting service at MSC
2.3.4. Setting up Post-merger process for M&A consulting service at MSC
Figure 2.6: Post-merger Integration process proposed
(Source: PWC) Phase I:
a, Set the course:
Articulate the strategy for the combined company: Since one new entity is generated through a merger process, the new company or function does not have
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the strategy from the start. However, strategy is very important in business, it influence the result of the business. Therefore, the new company has to be built a strategy which results growth and benefit for the company.
Determine the degree of integration and non-negotiables: After the merger happen, an evaluation has to be conducted to measure how well does the merger integrate and which part cannot be integrated. Aware of the situation the company is in will help them the build the solutions and avoid damages certain situations.
Figure 2.7: Degree of Integration
(Source: PWC)
Identify and protect core operations out of integration scope: This will help the company maintain their advantage and core value.
Customize the integration structure and approach: Choose the suitable model of structure will help company receive optimal result.
Designate integration leadership at all levels and establish the Integration Management Office: Assign leadership means that some employees are responsible for the work. Furthermore, there will be no conflict about the managerial positions which are still available. The Integration Management Office will help the integration happen smoothly and solve the problem about the integration quicker.
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Figure 2.8: MSC supporting team
(Source: PWC)
Develop communication plan and execute early communications: This communication plan will help the company keep in touch with their customers, employees and stakeholders. It will reduce the damage of losing customers or suppliers.
For example:
Welcoming letter/message
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Immediately after closing, a welcoming letter or individualized e-mail is to be sent to the employee of the acquired entity. Ideally the message is translated into local language, including:
Welcoming words from the CEO or top manager
Employment terms
New location (ensure that every transferring employee is assigned a work place and is aware of it)
New boss/supervisor
Who to contact for questions/answers etc.
Letter to customers
The buyer’s corporate communications function should arrange for all customers to be sent a letter informing them about the acquisition and anticipated changes from their point of view.
Key customers should also be individually contacted by sales individuals and management, where appropriate
Letter to vendors /suppliers
Identify all important vendors and partners that need to be informed
Prepare a letter informing about the acquisition and anticipated changes
Co-ordinate with corporate communications function for a unified message
b, Plan for “Day one”:
Identify and execute Day One requirements across all functions: Day one is first day after change of ownership. All functions need to get together, form their work as well as personnel with the help from Integration Team.
Develop 100 Day Plan including quick wins: Based on the design of Future State, 100 Day Plan with specific actions will be built and makes sure that the future wanted will become true and satisfy the owner.
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Secure resources and implement retention programs
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c, Design the future state:
Design functional and operational “to be” states: Based on the desire of the owner and the resource, situation of the company, the expectation and goals will be built and satisfy the owner of the company.
Identify, value, and prioritize key integration initiatives and synergies:
The integration initiatives and synergies will have to be addressed clearly. Then, they will keep track and propose actions to achieve those initiatives and synergies.
Develop leadership and organization structure: To have a strong organization, a clear, effective and suitable organization structure is needed the priority for every corporation. The company needs to build the organization structure quickly and assign the right person to key positions. This will make the company move forward sustainably.
Assess cultural differences and create cultural integration plan: In every mergers, cultural conflict is the common issue to the new company. Employees have different working habit and they are afraid to the new. The company needs to balance the managerial personnel with both companies’ employees holding managing positions. This will reduce the conflict and slowly integrate the culture of two companies.
Phase II:
a, Create detailed Integration plan:
In this phase II, companies have to build a possible, executable plan which is consolidated from all integration initiatives. Besides, the plan needs to fit with core business and prioritize with other initiatives. However, the resource of the company can afford it.
The detailed plan includes timeline, checklist and so on. Those things help the company to keep track where they are and do they stick to the plan. The
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sample of detail timeline and checklist of post-merger integration have been added in the Appendixes.
b, Execute 100 day plan:
In 100 first days after merging, the company will execute according to the integration plan designed in previous step. The plan needs to be executed promptly to avoid risks of uncertainty.
This step will be conducted by the company with consultancy of experts of MSC.
Phase III:
Maximize value through Future State Implementation
Implement, track, and monitor integration execution to ensure deal value capture: In this step, the company will observe and monitor the process of implementing the strategy. They will have some adjust if the expected synergy is not going to be captured fully.
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