Preparing for an Effective Post M&A Integration

Updated: Apr 21

A robust corporate development strategy often contemplates, and incorporates, certain inorganic growth to augment existing business or to expand or synergize the portfolio of offerings. According to Deloitte’s 2019 annual publication of the “M&A Trends Report,” it is concluded that ‘tax reform, a more relaxed US regulatory climate, and growing cash reserves fuel optimism among US dealmakers. And a recent uptick in merger and acquisition (M&A) activity shows no signs of slowing down. In this year’s survey, 79 percent of respondents expect the number of deals they close in the next 12 months to increase, up from 70 percent last year.’

In such a fruitful landscape, it is prudent companies looking to undertake M&A activity commence discussions and planning around post-transaction integration requirements. Careful due diligence, negotiations, and contractual assurances and documentation notwithstanding, the pre-closing planning and post-closing implementation of an integration process can be among the most challenging aspects of any acquisition. The purpose of this article is to outline practical approaches and considerations related to M&A integration matters prior to the commencement of any significant transactional steps.

The intent of this article is not to give strict instruction, but rather provide general commentary with anticipation of subsequent discussion and preparation, where able. While a company can anticipate a successful close of a transaction by mechanics alone, if it is not in a position to fully realize the synergies and other expected benefits of the acquisition due to unprepared integration planning and execution, the combined companies’ performance may suffer, and the long-term (and perhaps short-term) value of the deal may be lost.

It is imperative for the success of any 2019 transaction (together with all future transactions) that leadership start to establish the internal framework, process, and positions necessary for an effective integration. This should evolve into an integration management team. There will be a number of details and decisions that must be tailored to the particular acquisition target at the time, however let’s start to give thought and commence planning to what a 2019 integration looks like.

What Integration Model Should I Adopt?

M&A integration generally refer to two types of integration models for post-merger integration:

Light-touch integration

The acquired company’s operations and management are left intact. This model is typically employed if the acquisition value proposition was not based primarily on identified “go-to-market” synergies, such as combining products or sales teams. A light-touch integration can be employed initially, as part of a staggered approach, with the plan to implement a more exhaustive integration model to be executed at a later day. However, often the longer the delay in the integration, the more difficult the process to successfully integrate.

Full integration

The purchasing company executes a comprehensive integration strategy and plan across various core business functions (known as “workstreams”) to fully integrate the acquired company within the buyer company’s business. (if we clean this up, another subheader?) Integration execution begins immediately upon closing, with progress methodically tracked by workstream.

It is important to select the appropriate integration model to employ at the earliest stages of the transaction, taking into account several factors, including:

  • Whether the deal is strategic or financial

  • The industries in which the acquiring Company and the acquired company operate

  • The specific strategic reasons for the acquisition

  • The ease or difficulty with which the respective companies’ structures complement each other

Planning and Executing an Effective Integration

Have an Integration Team

An effective integration is led primarily by the assembly of an integration team responsible for implementing a plan across the company’s key areas of business. This integration team should be comprised of stakeholders from each of the company’s core functional areas in the integration. In addition, following the close of the transaction, the integration team should also include employees from the acquired company, to assist with functional and cultural integration.

An integration team should include, at minimum, the following functions:

  • HR

  • Applicable Business Group/Unit (including Sales, and Product if applicable)

  • Marketing

  • IT

  • Finance (including Tax, Accounting, and Payroll)

  • Legal

A designated point of contact for internal communications should be put in place, which may either: (i) be shared between HR and Legal; or (ii) outsourced to a communications consultant. Communications is a vital function post-transaction (see Section 4 below).

Each of the above-mentioned functions should appoint an individual to serve as the point person and be accountable for the integration goals of each workstream. This person is referred to as the Workstream Lead.

Develop Workstreams

As mentioned above, the process of post-merger integration should ideally start early when the transaction strategy is being determined. Ideally, the company will have standards and procedures in place for post-transaction integration prior to the integration plan being implemented; the high-level integration plan and business case should be in place as a standard procedure early in the due diligence phase. Workstreams are directly tied to the business functions of the integration team, with synergies need to be identified and defined – at least initially in an abstract form - and allocated to the respective workstream lead. All tasks and requirements should be detailed by workstream so that each responsible person takes ownership of the deliverables set out in the integration plan.

Appoint an Integration Project Manager

It is advisable to select an Integration Project Manager (“Integration PM”) to lead and implement the integration plan. and ensure that goals are being met for the first three (3) months and beyond. The responsibilities of the Integration PM will include, but are not limited to:

  • Coordinate closely with the Workstream Lead for each of the various workstreams to develop and meet the integration goals at the functional level

  • Monitor and report workstream and overall integration progress to the Integration Steering Committee (as described below)

  • Work with business development and legal teams to determine the post-closing interim services required (if any) from the acquired company’s employees, contractors, or other providers under a transition services agreement

  • Escalate any issues that arise and manage resolution

The Integration PM does not necessarily need to be a representative from the Integration team; rather, someone that can apply a consistent integration process and model to align with the Company’s objectives, and coordinate with workstream team members to partner, closely after signing, with the functional equivalents from the acquired company so that everyone is working off of the same plan with aligned objectives.

Establish a Steering Committee

The establishment of a steering committee is advised for the ultimate oversight of the integration. The absence of clear governance and guidelines may hurt the execution of the integration plan. A steering committee is comprised ordinarily of select personnel from the management team, with the skill sets needed to manage issues involving key integration workstreams.

The steering committee should clearly outline the reporting structure for the workstreams. The Integration PM shall help the steering committee devise appropriate meeting agendas and a timetable. Usually, following Day One (as defined below), the steering committee should hold weekly updates until the integration has met major milestones and achieved certain goals. The Integration PM is responsible for the overall management of the integration project. The workstream leads meet regularly with the team leader to report on the progress of their goals and objectives as set out in the integration plan.

Define Your Integration Strategy

An integration strategy is critical to an effective execution of the deal, and for efficiently preparing both parties for Day One (and beyond). The integration strategy is developed by the steering committee, Integration PM, and Workstream Leads, and should consist of defining the following key aspects:

  • The extent to which the acquired company will be integrated into Company’s business (for example, choosing between the light-touch or full integration model).

  • Guiding principles on how the integration project should be run, such as the plan and timing for combining product offerings, any new “go-to-market” strategy, and personnel decisions.

  • Objectives for the workstream leads. The workstreams convert those objectives into a list of tasks, persons responsible for those tasks, and related timeframes.

  • General responsibilities of the various workstreams.

  • The communications plan (both internally and externally)

Design the Integration Plan

An integration plan should be created following finalizing the integration strategy, and upon the completion of a comprehensive due diligence. The integration plan is ordinarily prepared by the integration team and should identify in detail all the tasks necessary to meet the integration milestones and have the acquired company be fully integrated by a scheduled date. The time it takes to complete integration will vary depending upon the size and complexities of the deal and/or acquired company; however, we should aim to fully complete integration no later than six (6) to twelve (12) months after closing.

An effective integration plan is organized by workstream category with columns and line items for each task that, for example, identify:

  • Priority

  • Owner or contact

  • Category: For example, in the Legal workstream, categories may include (without limitation):

  • Third party contract notification

  • Attain contract consents, where applicable

  • Contract assignment

  • Contract reconciliation

  • Amending and/or updating corporate documents

  • Entity dissolution (if applicable)

  • Work with HR & Communications on internal scripts and communications to acquired company’s employees

  • Add new facilities, equipment to insurance policies

  • Send out new certificates of insurance

  • Transfer any IP rights to Company

  • Prepare any new trademarks (if applicable)

  • Manage any “gun-jumping” and ensure the business is managed “in the ordinary course"

  • Assist in training of new employees on Company policies and procedures; and Preparation of transition agreements (if applicable)

  • Task

  • Status

“Day One” following Close of the Transaction

Day One is a significant milestone in the integration process. Day One marks the change in control in the acquired company’s ownership from the company’s equity holders to the acquiring company (or change in ownership of assets depending upon the structure of the deal). Day One should be targeted and prepared for from the earliest stages of the transaction. From the time that the deal is internally announced, the integration team must be keenly focused on identifying and executing Day One deliverables. The three primary workstreams that are most heavily impacted by Day One are:

  • HR (presuming the acquiring Company plans to retain target company employees)

  • Communications (both internal and external)

  • IT

Human Resources

HR has the responsibility for the most critical tasks that must occur on Day One, if employees are transferring to Beyondsoft as part of the transaction. Tasks may include a “Day One session” with all employees of the acquired company, typically in person at the headquarters of the acquired company with webcasts to other locations. The primary purpose of the Day One session is to:

  • Introduce the new Company and new management or reporting structure

  • Reinforce that employees have their jobs (if that is true). If layoffs are planned due to redundancies, HR will explain the process and whether severance and other related benefits are available. Alternatively, an assessment should be made whether the acquired company creates and manages the redundancy process at the same time as the closing of the transaction

  • Explain to employees why the deal makes sense. Typically, this messaging is best coming from representative of the acquired company and should include:

  • acquiring company is enthusiastic about the acquisition

  • the acquired company is supportive of the deal

  • the deal is good for customers.

  • Thank employees for their work and request support for the new organization

  • Provide an opportunity for employees to ask questions and get answers, particularly on the topic of employee benefits

The Day One session with employees is not the only critical interface between HR and the employees on Day One. Written communications are also important takeaways from the Day One session. A good integration practice is to provide employees with a welcome package that includes detailed information about benefits, and names of point persons to go to with questions or employment-related issues.

Clear and frequent messaging will be extremely important to the new employees as the integration is underway. Their first question is usually, “Do I have a job?” Bear in mind that employees can quickly share information about the sale of the company through social media and word of mouth. Therefore, the acquiring party must own the timing and content of the messaging by being prepared and proactive. It is a good practice to schedule individual meetings with acquired employees within the first couple of days following the closing.


The communications owner is responsible for developing the message and the script for all Day One internal and external communications. Therefore, as mentioned above, it is imperative it is clearly defined and designates the owner of this function, in absence of a Company communications group. In addition, some of the Day One tasks that must be completed by the communications workstream include:

  • Working with HR to prepare the Day One welcome package and slide-deck presentation

  • Finalizing the Day One Q&A (for both internal and external purposes), this includes any immediate changes required under the integration plan, such as reporting lines or customer communication

  • Distributing letters to existing customers of acquired company (working with Legal)

  • Distribution of prepared talking points (working with Legal) for sales and other employees who are likely to receive calls and emails from clients, key vendors, and other third parties

  • If necessary, sales and other customer-focused personnel may require a separate Day One session to ensure that a complete and consistent message gets to the marketplace

  • Drafting an e-mail message to employees concerning the integration on behalf of the business leader

Going forward beyond Day One, communications should work closely with HR and Legal to organize frequent communications with employees to keep them informed and engaged. These communications can be in the form of town hall meetings, weekly emails, or a dedicated intranet website.


Technology-related integration matters are possibly the most challenging and costly element of the integration process. This workstream will likely take the longest to fully integrate but is vital so as to capitalize on recognized synergies and achieve economies of scale by bringing the acquired company on to Beyondsoft’s technology platform. Therefore, integration of technology will undertake a more gradual and phased integration so as to avoid too much disruption in operations. On Day One, the focus is typically on two areas rather than specific deliverables:

  • Learning as much as possible about the technology profile of the target

  • Sharing with the acquired employees the IT integration plan components that affect them (for example, product migration time frames)

Cultural Integration

One of the most challenging components of post-close integration is the process by which the culture of the acquired company is integrated. During the due diligence review, the Integration PM should designate someone (ordinarily from HR organization) to closely examine the culture of the target company and identify:

  • Any dissimilarities in the culture of the acquiring company and target company (the smaller that the acquired company is, the more chance of dissimilarities)

  • Aspects of the target company’s culture that are important to the business (such as workplace location)

  • Any disparities in the two cultures that might impact employee morale, engagement, and even retention

  • Any elements of the target company’s culture that the buyer should adopt in its own culture

It is vitally important to recognize the significance of a company’s culture for its employees. While the intention of making cultural changes is meant to create alignment and reconcile cultural differences across the respective businesses, the integration team should consider leaving certain cultural customs intact if there is not a business reason to change them. Eliminating things seemingly as benign as a weekly in-office happy hour could negatively impact the employees. Those charged with cultural integration should also consider minimizing the changes or staggering the timing of any changes so that employees can get back to business as usual.

This article is made available by Carpenter Wellington ( to provide a general understanding of the topic set forth therein. In no way should this article be construed as specific legal advice, nor does the receipt of this article create no attorney client relationship in on itself, between you (the reader) and Carpenter Wellington. This article, in whole or in part, should not be used as a substitute for competent legal advice from a licensed professional attorney in your jurisdiction.

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