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Post Merger Integration

The document discusses post-merger integration (PMI), which is the process of combining two merged companies. PMI is critical but difficult as it involves integrating different company cultures, systems, strategies, and more. There are various aspects to PMI including legal and accounting integration, procedural integration, strategic business unit (SBU) integration, physical integration, product line integration, production technology integration, managerial and sociocultural integration, and financial integration. Successful PMI requires extensive planning and coordination across the entire organization to realize the potential benefits of the merger.

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271 views19 pages

Post Merger Integration

The document discusses post-merger integration (PMI), which is the process of combining two merged companies. PMI is critical but difficult as it involves integrating different company cultures, systems, strategies, and more. There are various aspects to PMI including legal and accounting integration, procedural integration, strategic business unit (SBU) integration, physical integration, product line integration, production technology integration, managerial and sociocultural integration, and financial integration. Successful PMI requires extensive planning and coordination across the entire organization to realize the potential benefits of the merger.

Uploaded by

vvvmmmyyy
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© © All Rights Reserved
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POST MERGER INTEGRATION

Introduction
Post-merger integration or PMI is a complex process of
combining and rearranging businesses to materialize potential
efficiencies
and
synergies
that
usually
motivate
mergers and acquisitions. The PMI is a critical aspect of mergers; it
involves combining the original socio-technical systems of the
merging organizations into one newly combined system.
Every company is different - differences in culture, differences in
information systems, differences in strategies, etc. As a result, the
Post Merger Integration Phase is the most difficult phase within the
M & A Process. Now all of a sudden we have to bring these two
companies together and make the whole thing work. This requires
extensive planning and design throughout the entire organization.

Meaning
The process of combining two or more
organizations into a single organization involves
several organizational systems, such as assets,
people, resources, tasks, and the supporting
information technology.[1] The process of
combining these systems is known as
'integration'. Integration Planning is one of the
most challenging areas to address pre-close
during a merger or acquisition.

Importance
Value Creation
Identify the sources of value and possible issues
and challenges within the integration phase.
Speed of integration.
strategic leadership

Various aspects of Integration

Legal and Accounting Integration


Procedural Integration
SBU Integration
Physical Integration
Product Line Integration
Integration of Production Technologies
Managerial and Socio cultural Integration
Financial integration

Various integration aspects


1. Legal and Accounting Integration
The most basic procedural task involves
integrating legal entities of the merging partners
through transfer of ownership title and
integrating the companies accounting systems.

2. Procedural Integration
Procedural integration involves combining
systems and procedures of the merged
companies at the operating, management
control, and strategic planning levels.

Example
ETO and Basalt
Declaratory and procedural individual
knowledge held by the staff is shared during
procedural integration and allows the
development of the organizational memory of
the new entity, on the basis of ICT use.

3. SBU Integration
Strategic business unit (SBU) integration
involves treating the acquired business as an
autonomous profit centre and integrating it into
the corporate wide strategic planning system.

4. Physical Integration
Physical integration of resources and assets
usually accompanies procedural integration. It
involves the consolidation of product lines,
production technologies, R&D projects, plant
and equipment, and real estate assets.
Example: ETO and Basalt

example
ETO and Basalt
It concentrates on a very rich policy of
communication
The regular meetings help the exchanges
between people.
ETO and Basalt thus accelerated the physical
integration of the teams by supporting the
emergence of procedural and declaratory
organizational knowledge.

5. Product Line Integration


This involves the assessment of whether the
products of the acquired business fit with the
strategy of the acquire. Two types of product
lines may be discarded on the basis of this
evaluation.

Example
Quaker Oats Company and Snapple
Beverage Company

6. Integration of Production Technologies


This is more complex than product line
integration. A simple type of production
integration may involve screening and divesting
redundant production facilities, but a more
difficult type of integration involves the
transferring of production systems across
divisional and firm boundaries.

7. Managerial and Sociocultural


Integration
Managerial and sociocultural integration is
perhaps the most difficult and least examined
post merger integration problem. It involves a
complex combination of issues related to the
selection or transfer of mergers, the changes in
organizational structure, the development of a
consistent corporate culture

Example
Novell and WordPerfect

8. Financial integration
The finance function plays a special part in
the overall process. Following its involvement in
negotiations and financing, it finds itself
confronted with a changed situation within the
organisation.

Conclusion
A fundamental assumption of strategies of growth
through mergers is that once the merger is
completed, its benefits will follow automatically.
This assumption is not borne out by the evidence
reviewed here. On the contrary, the need for
explicit efforts toward post merger integration
has been demonstrated.

THANK YOU

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