Post-Merger Integration: Mitigating the 70-90% Failure Rate
Post-merger integration (PMI) is a crucial stage in any merger or acquisition (M&A) process. However, according to recent studies, between 70% and 90% of M&A deals fail to achieve their intended goals due to poor post-merger integration. According to Harvard Business Review, the most common mistake in post-merger integration is underestimating the complexity and effort required to integrate the two parties involved. Companies tend to focus on financial and operational aspects, neglecting the human and cultural aspects that are equally critical to successful integration. Another challenge in post-merger integration is managing the different cultures and values of the two companies. The different ways of working, communication styles, and decision-making processes can create conflicts and tension between the teams, leading to lower productivity and employee turnover. Moreover, the integration of technology and systems can also be a significant hurdle in post-merger integration. Companies need to ensure that the systems are compatible and integrated seamlessly to avoid operational issues and customer service problems. Dealroom.net also reports that one of the biggest post-merger integration challenges is communication breakdowns, where messages are not effectively communicated to employees, resulting in confusion and a lack of clarity around expectations and objectives.
These challenges are just a few examples of the many issues that can arise during post-merger integration. However, companies can mitigate these problems by utilizing the ACS system. The ACS system is designed to improve emotional intelligence, empathy, and decision-making, which are essential qualities for managing post-merger integration successfully. By improving these skills, managers can better navigate the cultural differences, communication breakdowns, and system integration challenges that arise during PMI. This, in turn, can help companies achieve their intended goals and ensure the long-term success of the merged entity.