3. Post-merger integration
Consider an integration strategy as early as your initial portfolio review – and continue to develop it throughout the deal process – or you may run into avoidable risks and the potential benefits could be squandered.
With digital M&A, some companies will be left as stand-alone and some will be integrated immediately, depending on the assets and the structure of the deal. For example, if you are buying for technology or patents then you may integrate the technologies earlier, but if you’re buying a product or different business models then you leave it alone. You need to understand this and determine the right governance model from the outset or risk not realizing the full potential of the deal.
When you are developing your integration plan, then you need to ask yourself:
- How are you going to overcome the challenges in integrating the technology used by the target?
- How are you going to bridge the cultural differences that might arise?
- How are you going to manage the potential cybersecurity and compliance issues that could emerge?
Failure to do this could see trust between partners – or between management and talent – break down.
Rather than focus on arbitrary metrics, based on set targets, timeframes, and projections of profits, businesses need to develop clear outcome-focused milestones when looking at integration. To pick the right metrics, you need to ask yourself what results you are looking for. With digital innovation, much of it is about the huge potential over the short-term gain. Having outcome-based metrics can enable more effective decision-making and allow for agile innovation.