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Post-Merger Integration

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Post-Merger Integration - CMS PMI services

PMI is key – integration is crucial to success

From corporate acquisitions to mergers and joint ventures, the success of M&A depends on a range of factors across all phases of the project. But only the integration phase reveals whether the new organisation is achieving the pre-defined objectives and can leverage the intended synergies. Merging and integrating previously independent companies into a single entity marks the completion of an M&A project. For completion to be deemed a success, though, robust post-merger integration (PMI) is essential.

The strategic and economic objectives of an M&A transaction are as varied as they are complex, depending on the specific scenario and the expectations of the businesses involved.
The challenges of integrating the target company into the acquirer’s structures are equally diverse. The decision on the type of transaction, e.g. an acquisition or merger, sets the general course for how quickly the target company can be integrated and to what extent this happens.

Anyone who waits until after closing to consider the practicalities of merging the acquiring and target companies faces failure. Studies have repeatedly shown that underestimating the importance of timely and carefully planned post-merger integration is a shared feature of unsuccessful M&A transactions.

Key takeaway: Detailed early planning from the outset through to the integration phase is vital for successful integration.

CMS can help you to cover post-merger integration issues from the start and avoid pitfalls. Our M&A / PMI teams work closely with you to monitor all the necessary legal and tax-related steps in the transaction right from day one. To help ensure successful post-merger integration, they simultaneously remain aware of the big picture.

The road to successful integration – phases of the M&A process

phases of the M&A process

Pre-acquisition phase

The initial course for successful acquisition of a company is set in the pre-acquisition phase. This phase involves fundamental questions of strategy, the decision to buy and crafting a strategy for the proposed acquisition. The requirements profile and screening of the target, together with strategic analysis, form the basis for the downstream transaction process and subsequent integration of the target company.

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Acquisition phase

Once a suitable target has been identified, initial contact has been made and a non-disclosure agreement (NDA) signed, along with other documents, the technical phase of the transaction begins with due diligence (DD). The purpose here is to obtain crucial information about the target’s potential, but also to identify possible commercial, financial, tax, legal, real estate, environmental and HR risks. The DD findings provide the basis for steps such as establishing the purchase price and structuring the transaction (deal design). The results of due diligence are also essential for advance planning, design and implementation of integration activities. In turn, the DD teams need to be aware of the proposed integration structure so they can take this into account during information gathering. Depending on the specific requirements of the deal, PMI may best be served by conducting integration due diligence that goes beyond the standard due diligence process.

The acquisition phase is all about contract (SPA) negotiations and designing the deal in more detail. The choice of acquisition structure involves making crucial decisions and setting objectives that need to be taken into account during subsequent integration.

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Post-acquisition phase

The post-acquisition phase plays a key role in the overall success of the transaction. In this phase, the aim is optimum integration of the target into the acquiring company or effective merging of the companies into a single entity (post-merger integration – PMI). Here it becomes apparent whether the objectives can really be achieved, and the anticipated deal synergies leveraged in a timely fashion.

Depending on the underlying commercial and corporate strategy, integration usually spans a large number of areas, with corresponding differences in depth and speed. What holds true for all integration processes is that even in routine cases, precise planning at an early stage is essential for integration to be a success.

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Post Merger Integration - CMS PMI Services
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Post Merger Integration - CMS PMI Services
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Key contacts

Richard Mitterhuber
Partner
Rechtsanwalt | Head of Corporate / M&A, CMS Germany
Munich
T +49 89 23807 306
Jörg Schrade
Partner
Tax Adviser | Head of Tax, CMS Germany
Munich
T +49 89 23807 380
Martina Hidalgo
Partner
Rechtsanwältin | Fachanwältin für Arbeitsrecht (Certified lawyer for labor and employment law)
Munich
T +49 89 23807 106
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