3 Proven Tips for Integrating a Merger or Acquisition


We know that many merger negotiations may struggle and quite a few will fail. However, the prospect of integrating organizations causes high level concerns for Board Directors, CEOs and Executive Teams.

Putting the issue of job security for senior and other staff aside, here are three very practical tips for improving your chance of successful integration.

1. Start Integration planning early as you can

2. Resource it well

3. Ensure the agreed timeframe is actively pursued.


Tip #1: Start Integration Planning as soon as you start talking about mergers

Integration Planning needs to start as soon as you commence talking about mergers or acquisitions.

You don’t need a comprehensive plan in these early days, but you should have somewhere to “park” ideas and issues that arise in your early discussions.

In an earlier email, and in our Masterclass on M&A, we share suggestions on strategy, due diligence and integration. We also share 20 critical questions for Boards to discuss to determine their appetite for partnerships, collaboration and Mergers and Acquisitions.

During discussions of these questions, ideas and issues may emerge and should be captured and “parked” somewhere for future attention.

An example may be that you wish to protect an asset ahead of a merger.
The asset may be a building funded by your local community. This asset could be protected by incorporation of suitable provisions in the new Constitution, as well as the Integration Plan.

Another example is where you may suspect that there are vulnerabilities in the business and IT systems of your organization (or the merging partner organization).
These should be documented early, so they can be addressed at an appropriate time during the integration phase and of course documented well in your Integration Plan.


Tip #2: Apply resources to support timely and successful Integration

Many Boards would actively debate a business case document around purchasing a building that would help to secure the longer-term future of the organization.

During M&A, Boards need to have frank discussions about utilising some of their valuable cash reserves to adequately resource the Integration Plan.

We have seen some Directors who think that the Executive Team should manage integration alongside the operational activities of the two entities. In our experience, this can lead to some catastrophic consequences and very substantial risks for the new entity.

One problem is the higher potential for failure to successfully integrate. This can occur because executives are busy juggling the “Business As Usual” for the operations, and may not apply sufficient effort to ensure integration succeeds.

A second risk is that current operations and contracts may struggle or fail due to lack of sufficient attention and oversight by the executives.

We recently heard of a merger involving around 24 related entities. The Board of the new entity and their CEO were developing a business case for investing around $11m AUD in a single Client Information Management System.

This would help support integration, as well as achieve significant savings in operational costs in the medium-term. In fact, they had set themselves a target of implementing this Client Information Management System within two years. 

They also committed to carefully documenting savings achieved through this System and wanted the ‘savings’ to offset the cost of implementing the System over the first two years of its use.

An investment of $11m exceeds what many nonprofits might be able to consider. However, in this case, it represents around $460k from the reserves of each of the previous entities.

Boards should have discussions about realistically resourcing the Integration Plan. We have seen some agree to dollar amounts being agreed in early M&A discussions.

Some have even allocated a percentage of the value of available reserves, such as 10% of reserves of both prior entities being committed for Integration).

Tip #3: Carefully consider a firm timeframe for Integration

Many readers will have heard of organizations that are still struggling with Integration some three, four and five years after the merger occurs. This has potential to negatively impact on the staff, volunteers and even the people served by your organization.

Incomplete integration can lead to double-handling of information, vague arrangements for accountability, and eventually can lead to “Integration Fatigue” for staff and volunteers.

Our recommendation is that you set up a 100 Day Plan for Integration. This will focus on the urgent and important issues that need attention during the integration.

With adequate resourcing (as per Tip #2, above) this can lead to early ‘wins’ and ensures that positive progress is visible to staff and volunteers.

Beyond the 100 Day Plan, you should also ensure that other Integration issues are documented in a plan.

Key tasks must be clearly allocated to appropriate managers and executives to pursue and report to the Board. If the operations of the organization are quite complex, there may be a need to extend the Integration Plan to cover two or even three years.

(We have templates available for 100 Day Plans, and longer-term Integration Plans.)

Having just offered the above advice on a tightly defined timeframe for integration, we have also advised organizations who have taken a very different approach.

For example, we have seen the consolidation of a group of around dozen entities Australia wide, into a single, national entity. This consolidation was agreed by the member entities based on ‘opportunistic’ integration as major changes occurred for their key business systems.

For example, integration of systems for accounting, payroll and HR would all occur when the current support contracts expire. These expiry dates could well be very different for the different member organizations.

Should you pursue this avenue for integration, we strongly recommend that you introduce a firm deadline for all systems to move over to the ones chosen by the new entity. In our example here, the consolidated entity agreed everyone would migrate to new systems within the five-year timeframe.

Conclusions for your Board to debate:

Start Integration planning early as you can, resource it well, and ensure the agreed timeframe is actively pursued.




Partnerships, Alliances, Mergers & Acquisitions Masterclass

Join us for an interactive Masterclass covering the entire M&A process and alternative strategies you can use to achieve growth and sustainability.

Brisbane: 19 March | Melbourne: 23 March | Sydney: 26 March | Canberra: 27 March