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Risks of Mergers and Acquisition Integration

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A robust decision-making process is required to take decisions that coordinate work streams and set the pace for a fully integrated company. This should be supervised by a highly experienced individual with strong leadership capabilities and processes, perhaps an emerging star within the new organization or a former leader of one of the acquired companies. The person chosen for this job should be able and willing to commit 90 percent of their time to this job.

Lack of coordination and communication can slow down integration and hinder the combined entity from achieving rapid financial results. Financial markets expect significant and early signs of value capture, and employees could interpret an inability to integrate as an indication of instability.

In the interim the core business has to remain the main focus. A variety of acquisitions can result in revenue synergies, which require coordination between business units. For instance, a customer products company that is restricted to a specific distribution channel could combine with or buy companies that use different channels, and gain access to previously untapped customer segments.

A merger can also divert managers from their jobs by taking up too much attention and energy. As a result, the company is harmed. A merger or acquisition could not be able to address the culture issues that are essential to employee engagement. This can result in issues with retention of talent and the loss of key customers.

To avoid these risks you must clearly identify what financial and non-financial goals are expected and by when. To ensure that the taskforces for integration are able to move forward and achieve their goals in time, it is important to assign these goals to each of them.

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