Post Merger & Acquisition Integration Planning

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How to Make Your Post-Merger Integration Run Like Clockwork

The modern landscape of medium and large enterprises has seen a significant rise in Merger & Acquisition (M&A) deals over the last decade. This is partly due to increased globalization, a need to produce cost and revenue synergies, and the desire to consolidate resources, skills, and workflows that benefit both sides of the deal. Statista notes that 2015 saw a total of 5.8 trillion dollars in M&A deals, while 2016 saw a combined value of 4.8 trillion dollars in M&A deals, with 2017 totaling 4.7 trillion dollars in said deals.

That said, it is important to note how mergers differ from acquisitions. Though often used interchangeably, a merger indicates a mutual, complete combining of two companies into a single, new corporate entity, while an acquisition is indicative of one company buying out another, which does not result in a new company. Regardless of the specific process, M&A deals are significant in that they allow two companies to combine their resources in order to work in a way that typically results in an increase in efficiency, productivity and overall revenue. There are several steps that are needed for carrying out a successful merger/acquisition (which is usually governed by a financial advisory company). Among the core steps for a successful M&A deal, there are three major phases that summarize the entire M&A process – Deal preparations, Deal execution, and Post-Merger Integration (PMI).

Regarding the latter (PMI), according to BCG, errors in strategizing/planning and executing the post-merger integration (PMI) phase accounts for 46 percent of all failed M&A deals, making it the number one reason why such deals fail to produce increased efficiency, revenue and shareholder value. To be specific, the post-merger integration phase is the process of combining two organizations into one, including resources, IT infrastructures, processes, teams, assets, software systems, etc., and is usually overseen by a integration management office. Though PMI processes often occur after a deal is closed and the merger/acquisition is done on paper, integration planning should always be done during the first major phase of the M&A process (the deal preparation phase), in order to ensure that the integration process has the potential to succeed. According to Transaction Advisors (2016), the successful execution of the PMI process often results in companies producing share value returns that are 6-12 percentage points higher than those produced by enterprises that do not successfully carry out the PMI phase during the overarching M&A process.

That said – though every PMI plan should be tailored for the specific companies involved, and according to a specific goal – there are several general steps that any enterprise can take to ensure that the post-merger integration (PMI) process runs smoothly. Such steps include defining a clear M&A goal, vision, and model at the beginning along with a clear PMI plan, communicating with all affected individuals clearly, managing the PMI process on a day-to-day basis, focusing on optimizing both cost synergies and revenue synergies with each PMI workflow, and constructing the new organization with an appropriate structure and skilled personnel, all while fastidiously ensuring that continued intra-business communications and organizational culture-integration processes are unhindered and carried out efficiently.

The 3 Biggest Challenges of Post-Merger Integration (PMI)

Aside from the core cause of PMI process failure among M&A deals (an inefficient integration plan), there are three significant challenges that must be overcome in order for all of the processes associated with the PMI phase to succeed – communication challenges, employee retention challenges, and cultural challenges.

Communication Challenges

Every M&A deal has a different effect on different groups. For acquisitions specifically, employees working with the acquiring company, employees working for the acquired company, shareholders on both sides, customers, etc. will react differently to the news of an acquisition. This also holds true for merger deals. That said, it is imperative that effective communication amongst all parties is carried out in order to ensure that the M&A process goes smoothly. While the above is true for all beginning aspects of the M&A process, it also holds true for all workflows associated with the PMI phase. Often the primary concern associated with the PMI process is the resulting organizational structure, along with which systems/resources and assets will be combined (and how), which company’s assets/systems will be retained, which will be disposed of, and which will be replaced entirely with a new system/asset. For the entire process of integrating two merged enterprises, communication is key in order to ensure that the integration plan is carried out successfully without any major issues.

Employee Retention Challenges

A newly merged organization will logically not run in the same exact way as either of the two companies when they existed separately. A new business model, new operational processes, new goals to match a changing market, etc. are all typical additions to a new company resulting from the merger of two enterprises. With that, the organizational structure of the new company will differ from the two initial (individual) companies. Thus, employees may be shifted in roles and responsibilities, some personnel may be unneeded, and new, skilled personnel may be added to the newly built company. That said, effective change management is pivotal during the entire PMI phase, and yet is most crucial in overcoming the employee-retention challenge.

According to a 2014 Towers Watson M&A retention study, 88 percent of high-retention companies viewed their M&A deal as being a success versus 67 percent of low-retention companies. Thus, effectively managing the new processes, structure and system associated with retained employees is crucial during the PMI phase in order to optimize the entire PMI process of employee retention. That management includes analyzing, crafting and implementing a strategic employee-retention plan that includes dealing with employee career progression, employee performance, employee compensation, employee retraining, employee team organization, employee roles and responsibilities, etc. Ultimately, it is important to take note of specific departmental goals within the new organization, and matching such goals with the appropriate personnel, which helps to ensure that all necessary employees are retained accordingly. This is important as estimates indicate that, in the U.S., it can cost an organization 50-400 percent of an employee’s salary to replace him/her. Thus, employee retention directly affects the resulting cost-synergies of a merger & acquisition deal, and also directly affects the finances of the new organization.

Cultural Challenges

Every company has a different work culture – its work ethic, work operational philosophy, management goals, innovative policies, etc. Due to the differing nature of two separate enterprises, it is important for effective change management to also be applied to the task of creating an appropriate work culture synergy in the newly built enterprise. This is because, when it comes to the PMI phase – according to a Bain survey – culture clash is one of the major reasons for PMI failure. When two companies – that operate in a way that is significantly different – combine into a single enterprise, everything from productivity, efficiency, operations/processes, workflow efficacy, etc. may suffer if the two sides cannot work together. Thus, it is also important for companies to craft a clear, in-depth, strategic plan for establishing the workplace environment and work culture (policy) for the newly built enterprise. This is done by recognizing the differences among the two organizations and writing a detailed guide clearly stipulating the culture that is most appropriate in the new organization.

Unrealistic Expectations

A fourth challenge associated with the PMI phase of M&A deals is associated with the expectations of everyone involved in the PMI phase – including personnel, the governing body, executives, shareholders, etc. This is important because integrating two companies into a single entity often takes more time, overhead and money than might have been expected. This can directly affect the productivity of the new business, and thus the top line of the organization. At the same time, the company must continue to operate on a daily basis to produce results – while the integration process is ensuing. Thus, it is often important for planners and executives to manage the entire PMI phase discreetly as a separate set of operations/workflows from the normal, day-to-day workflows. This includes setting up specific teams for the PMI phase, while having dedicated teams for the normal, daily operations of the enterprise.

Post-Merger Business Process

There are several key steps that comprise the Post-Merger Integration (PMI) Phase associated with M&A deals. It is important to note that the first step associated with the post-merger business process (integration planning) should actually be completely or partially carried out before the deal is even finalized on paper, which helps to ensure that the merge can be fully realized in actuality, and not just on paper. That said, while every M&A process differs in the strategizing and implementation of a merger/acquisition plan and the associated integration plan, there are a few general processes in the M&A lifecycle that can be utilized in most post-merger situations, which – according to BCG – is defined in 12 steps – integration planning, listing resources, managing integration discreetly, organizing PMI teams, having leadership, maximizing cost synergies, defining cost and revenue targets, retaining customers, managing personnel, designing the organization’s structure, ensuring efficient communication, and managing the integration of the organization’s work culture.

Integration Planning

Integration planning includes planning out and strategizing the specific objectives, goals and vision for the merged company, and should be done before the M&A deal is finalized on paper.

Listing Resources

After planning the post-merger process, it is important to craft a clear list of assets, resources, IT systems, software infrastructures, etc. that need to be integrated, upgraded, disposed of, modified, etc., which helps to establish guidelines with regards to how the actual merger will be accomplished and what will be merged.

Managing Integration Discreetly

Separating the integration workflows from the normal, daily workflows, is the next step, and is a critical step to ensure that the integration process goes smoothly while the newly built company continues to be productive.

Organizing PMI Teams

To ensure that the merger process is efficient, it is best for teams – composed of personnel with specific skills – to be created and coordinated in order to be matched appropriately with the required PMI tasks and processes.

Having Leadership

Having active, experienced leadership to manage the PMI process is important in order to ensure that the process is done efficiently and correctly, according to the plans set out by the company executives.

Maximizing Cost Synergies

Plans should be set out to maximize – and take advantage of – cost synergies associated with the merger. Maximizing revenue synergies should also be set as a goal.

Defining Cost and Revenue Targets

In order for the new business to be successful, it is important for clear cost and revenue goals to be set, and for performance indicators to be measured on a consistent basis to determine how well those goals are being met.

Retaining Customers

Communicating with customers and including them in the integration process (e.g. obtaining feedback, sending out newsletters about the new business’s novel products/services) is an important step to help the new business retain its customer base.

Managing Personnel

Retaining talent in the new enterprise is key, and thus it is important to select, train, retain, and manage personnel, while also employing a plan that tracks their performance, compensation/benefits and career.

Designing the Organization’s Structure

A very significant step in the overarching post-merger integration (PMI) process is the crafting of the new organization’s structure, which includes defining the organization’s position levels – executives, directors, managers, entry-level personnel, etc. – while also indicating their roles and responsibilities.

Ensuring Efficient Communication

Ensuring efficient communication between different integration teams, daily operations personnel, executives, customers, shareholders, etc. helps to mitigate any issues with the post-merger integration phase, and ensures that all processes are smoothly carried out.

Managing the integration of the Organization’s work culture.
Ensuring that a clear workplace philosophy is in place helps to create a uniform work culture and healthy working environment that allows everyone to work together effectively and efficiently, which ultimately helps to increase productivity.

What Makes a Solid PMI Plan?

As has been noted, a solid PMI plan, that is crafted at specific points during the M&A lifecycle, ultimately helps to ensure that the entire merger – and the latter post-merger integration phase – goes smoothly. Though every integration plan must be tailored for a specific merger deal, there are several key points that every solid PMI plan should have, including the appropriate, in-depth content, effective management and leadership being stipulated, and the most pertinent use of technology to ensure that all integration workflows are conducted correctly.


When writing the content of a solid integration plan, it is important to be a detailed as possible. This helps to guide the execution of the plan in that all parties involved are able to understand and implement the exact processes to complete the integration phase according to the guidelines set forth in the PMI plan. Additionally, the PMI plan should contain a vast amount of information to ensure that all aspects of the integration phase are covered. Consequently, the integration plan should cover all functions within the organization – this includes departmental functions of the organization (business processes) and various aspects of the enterprise, including people, culture, technology (infrastructures and business systems/applications), etc. Lastly, a well-written PMI plan should be clear, concise, to-the-point, and should contain easy-to-follow descriptions of all integration activities.


The personnel that make the integration happen are key to the entire PMI phase. Specifically, it is important to have senior management oversee the integration phase, which includes a central team managing the entire integration process. In order for this to be accomplished accordingly, it is important for the PMI plan to establish clear roles and responsibilities for everyone involved with the integration activities. That said, the PMI phase should include as many pertinent personnel, from both companies, as is necessary for the process to be completed on time.


Information Technology infrastructures can play a significant role in aiding the management of the entire integration process. This includes using technology systems to store a centralized repository of all integration plans and keeping on-demand reports of the entire integration process (including each step of the PMI phase). Additionally, the PMI plan should ensure that all tools that are used during the PMI process are easy to use and suite everyone that is involved.

5 PMI Best Practices

In addition to establishing a concise, detailed PMI plan, there are a number of best practices that should be followed when carrying out the actual integration workflows of the PMI phase, including being prepared, identifying the right people, setting pertinent priorities, establishing clear and transparent communication, and considering the work culture of the newly built enterprise.

Be Prepared

Preparation is always key when carrying out any large-scale business operation, while being especially true when carrying out the merger/acquisition and integration processes associated with combining two enterprises. Being prepared includes having both strategic and tactical plans set forth to overcome all obstacles and issues that may arise, while also establishing an estimated timeline and budget for the integration phase. Regarding the latter, though it is crucial to set target dates and budgetary allowances, it is of utmost importance to realize that the entire integration phase – and each associated step – may take longer, and cost more, than the initial estimates. 

Identify The Right People

While retaining skilled employees after a merger/acquisition is always important, it is equally important for the right personnel to actively participate in the post-merger integration (PMI) phase. For this to be done, the correct, specialized personnel must be identified and matched with the appropriate tasks and workflows that, upon being finished by said personnel, will result in the successful completion of the PMI phase.


One of the more crucial best practices associated with completing the PMI phase successfully is to set priorities, while remaining flexible. Setting a clear list of priorities allows all parties involved in the integration phase to work in an efficient manner, while also helping all integration-phase personnel to be organized so that they can work according to what is a higher priority. That said, it is also important for the integration phase managers to be flexible when it comes to lower priority initiatives, which means being willing to cancel or pause lower priority initiatives, since there will typically be more work to do than money or people available to do it.

Clear and Transparent Communication

As noted beforehand, establishing clear and transparent communication between all parties is very important. This means ensuring that integration-phase personnel, integration-phase managers, and non-integration phase personnel communicate clearly with one another, and understand their relevant goals, responsibilities, and roles in the enterprise. Establishing clear communication also means that if problems arise, a clear communication pipeline exists to ensure that such issues can be resolved quickly without additional issues compounding the original issue due to corporate communication hindrances.

Consider Culture

When personnel from two different companies are working together to solve the complex issue of post-merger business integration, it is pivotal to consider – and plan ahead to solve – work culture issues. Since every business operates differently, a significant PMI best practice is the establishment of a uniform work culture philosophy and set of guidelines (i.e. a work culture policy). Following such a best practice helps to ensure that everyone works together effectively, and that everyone, thus, remains productive.

Monitor, Validate and Correct

PMI processes are some of the most complex business processes that exist in the corporate world. Thus, all post-merger integration (PMI) workflows should be monitored and thoroughly validated throughout the entire PMI phase. Monitoring said PMI workflows can allow business managers to match each workflow with the original post-merger integration plan, which helps to ensure that everything is going according to plan. As the PMI phase continues, validating each completed system allows managers to determine whether all systems are operating correctly. During the validation process, all issues that arise – and all integrated systems that don’t work as expected – should be corrected. That said, while it is important to have targets, goals, and expectations, it is also unrealistic to believe that everything will work perfectly the first time. Per the above, every step of the Post-Merger Integration lifecycle should include monitoring and validation tasks, so that, once everything is completed, the enterprise’s daily operations can continue unhindered and uninterrupted.