FREE online courses on Mergers & Acquisitions - Chapter 6 - Specific Areas of Integration

 

As we move forward with the integration process, a new organizational structure will unfold. There will be new reporting structures based on the needs of the new company. Structures are built around workflows. For best results, collaboration should take place between the two companies; mixing people, combining offices, sharing facilities, etc. This collaboration helps pull the new organization together. As noted earlier, a centralized organization will experience less difficulty with PMI than a decentralized organization. Collaboration is also enhanced when there are:

 

• Shared Goals - The more common the goals and objectives of the two companies, the easier it is to integrate the two companies.
• Shared Cultures - The more common the cultures of the two companies, the easier the integration.
• Shared Services - The closer both company's can come to developing a set of shared services (human resource management, finance, etc.), the more likely synergies can be realized through elimination of duplicative services.

 

Many functional areas will have to be integrated. Each will have its own integration plan, led by a Task Force. Two areas of concern are compensation and technologies.

 

Compensation Plans: It is important to make compensation plans between the two companies as uniform as possible. Failure to close the compensation gap can lead to division within the workforce.  Compensation plans should be designed based on a balance between past practices and future needs of the company. Since lost productivity is a major issue, compensation based on performance should be a major focus.

 

Technologies: When deciding which information system to keep between the two companies, make sure you ask yourself the following questions:

 

• Do we really need this information?
• Is the information timely?
• Is the information accurate?
• Is the information accessible?

 

One of the misconceptions that may emerge is to retain the most current, leading-edge technology. This may be a mistake since older legacy systems may be well tested and reliable for future needs of the organization. If both systems between the two companies are outdated, a whole new system may be required.