Tools and Ideas for Post-Merger Reorganization

Post-Merger Integration
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Devayani Vyavaharkar
Student (University), India

Tools and Ideas for Post-Merger Reorganization

🔥NEW Thousands of mergers and acquisitions (M&As) are taking place every year globally. However, as we all know, many, if not most, M&As are not successful.
Have you ever wondered what sets a successful M&A apart from the failed ones?
Crucial factors for ensuring a successful post-merger integration are:
  • The degree of match/fit between both organizations' key CULTURAL CHARACTERISTICS, and
  • The ORGANIZATIONAL ALIGNMENT of both organizations (i.e., the degree to which people, processes, and the organizations' main elements are aimed at achieving the strategic objectives of the new formed entity).
Additionally, the REORGANIZATION APPROACH of the fused companies also plays a crucial role after their merger. Post-merger reorganization refers to this process of managing and restructuring the organization's various areas to ensure that they align with the merger agreement's requirements, aims, and objectives.

For instance, if a merger aims to reduce cost structure, the company may need to restructure its workforce by eliminating employee redundancies. Similarly, post-merger reorganization may require a change of company policies, organization structure and sometimes even the company's name or logo. Post-merger reorganization aims to ensure that the merged companies work smoothly and that their processes are streamlined and are uniform across the merged companies.

I am trying to make a list of all main instruments and ideas for reorganizing after a merger💪. So far, I identified the following ones:
  1. DEVISE A PROFIT AND LOSS STATEMENT FOR THE MERGER OR ACQUISITION
    The expenses incurred during a merger are beyond the mere charges of hiring lawyers, M&A specialists, law firms and various consultants. To mention just a few things, it may include a decline in profits and/or in employee productivity or an increase in employee turnover due to the uncertainty brought about by the merger. Obtaining an overall insight may help the company set specific priorities, such as reorganizing the company's incentive system.
    Similarly, foreseeing the profits incurred by the merger may help the parent company design a framework for boosting its revenue synergies and market expansion.
  2. BE AWARE OF STRENGTHS & WEAKNESSES OF ALL ENTITIES
    This information has to be gathered for each company through internal and external means. For instance, by interviewing former/current managers, employees and customers. Understanding the SWOT analysis reports of the merged companies could also provide important insights and help realize which areas need to be worked upon and facilitate problem-solving to work towards efficient functioning and smooth running of the organization.
  3. APPOINT A REORGANIZATION TEAM
    A reorganization team will ensure that all the functional areas of the merged companies are thoroughly inspected and restructured, if necessary. It may also act as a medium to keep the employees aware and included in the processes and action plans being utilized post the merger. It may help ensure that the post-merger reorganization occurs orderly and help address grievances swiftly.
  4. REDUCE FEARS AMONG EMPLOYEES
    An employee faces two important questions after a merger. "Will I be able to retain my job?" and "Will this merger affect my current wages and incentives?"
    Furthermore, once the merger is complete, the appointed leaders will have the task of assigning duties and responsibilities as per the reorganization. Such situations may lead to a rise in anger, frustration and fear among employees due to the sudden change of teams or the unpredictable environments in which they are supposed to work.
    During this period of confusion, the employees will have a strong need for a leader and managers who guide and motivate them. The connect and communication skills displayed by these managers will help the employees feel included and reduce their anxieties and misinterpretations during such times of uncertainty. This kind of support and assistance helps to avoid the loss of a much needed talent pool from the companies after the merger or acquisition.
  5. USE TEAM CHARTERS
    Multiple teams can be created following a merger. A team charter refers to a document that helps define the objectives, structure, functions, mission, operations and responsibilities of a particular team. It helps to set boundaries and restraints, thus enabling teams and team members to work in a specific goal-directed manner. Usage of team charters can be a useful tool to integrate separate teams and employees of the merged companies, thus enabling the smooth functioning of the newly formed teams, with members focusing on common goals and objectives.
  6. CREATE A VEHICLE TO ASSESS AND DECIDE UPON OPTIONS
    Post-merger reorganization may give rise to many issues and challenges. The merged companies are likely to put forward different solutions for them. In such circumstances, there will be a need to evaluate the pros and cons of each of the recommended solutions. This may help avoid the negative consequences of a haphazard decision and facilitate selecting the solution which will be the best for the overall company and its objectives.
These were just some tools or ways in which post-merger reorganizations can occur smoothly, with reduced turmoil and hassles.

⇨ Please help me complete this list of possible mechanisms for effective post-merger reorganization. Thank you.

Sources:
Nitzberg, N. (2016, October 31). Building a better team after a merger or acquisition. PM360.
Benchmark International. (2020, February 26). Key steps for successful post-merger reorganization.
Heidari-Robinson, S., Heywood, S., & Edmonstone-West, B. (2016, December 21). A 5-step process for reorganizing after a merger. Harvard Business Review.
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