Post-Merger Integration

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.

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.

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.