Last week, I posted about how the Integration Plan needs to derive from the Business Strategy involved. I want to talk about what Integration is and how it gets done.
The basic is pretty simple. Integration is the act of making two companies into one company. The need is to make sure that this change happens as smoothly as possible. There are 3 groups that are of great concern: Customers, Employees, and Vendors. Each one of them will have separate concerns along the same time: “What is going to change?” Because of this, the most important part is a communications plan. Everybody involved needs to be informed. When I was involved in larger acquisitions this could be as simple as an email for smaller customers to phone calls and visits to larger customers. Vendors will be aware of this change normally as contracts are going to be assigned to the new company. There will be a desire to ensure the financial stability of the new entity and some idea of any changes in forecasted need. Employees will want to have some insight to how this is going to work, especially in the acquired firm. This normally takes place in the form of All Employee meetings.
This communication has to be clear and consistent on what is going to happen next and how decisions will be made. Imagine two small firms in a city merging. Something as simple as where will the company be located can become an issue. By having clarity and upfront planning, many challenges can be avoided.
After that, comes the hard work of looking at overlaps within the new firm. At the simplest level, there will be a number of direct functions duplicated in the Administration of the firm. This includes things like Bookkeeping and Accounting, Human Resources and Information Technology. Generally, the acquired firm’s systems will be replaced by the acquiring firm’s systems. This is not always the case, but is normally true. It is important that the people that support those systems that are going away are maintained while the two systems are combined into one. There may be a need to retain some people after that, but most will exit at that point. Having clarity on timing and compensation will be important as people have to make choices about what they do next.
Once these basic systems are combined then it is time to move into the strategic part of the purpose of the acquisition. In reality, there is significant overlap in the strategic and integration portions of the acquisition. Intellectually they are very separate and I will talk about strategy next.
Have a great day!
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