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July 07, 2018 4 minute read

Developing Merger Integration Checklists

Developing checklists for integration of an acquired business is difficult even for serial acquirers. Acquirers may have a general approach for integrating each functional area, but they may not have a detailed, standardized method for integrating a new company, its employees, and its operations into the acquirer’s structure.

Relying on the personal knowledge of the acquirer’s individual functional area managers and staff will be limited by their respective experiences. In certain instances, they may have developed their area-specific checklist. But this list may not be all-inclusive or integrated with other aspects of the company’s activities. Company-wide, comprehensive checklists are essential to assure continuity and standardization of approach. While developing a checklist seems like a simple process, it is difficult to create one during an integration activity, and when the project is completed, it may have a lower priority. There may be an overarching methodology for the integration, however, the specific tasks and management of the project may not be well documented. Repeatability of the integration process is therefore uncertain.

Occasionally. the acquired firm’s staff and operations are blended into the acquirer’s operations as though they were basically “new employees and activities”. Perceived benefits and advantages made the acquisition attractive, with value worth the purchase price. These may be lost on the integration team without specific guidance and management of the project.

Checklists assure that every question is asked and answered, whether they are directly relevant or not. Technical areas such as IT, Accounting, Cash Management, Benefits, and Contract Management lend themselves to formalized checklists and task development. Other areas that rely more on individual initiative, creativity and approaches, such as Legal, Sales, Research and Product Development will need much broader approaches in a checklist. This will assure that the individual nuances are captured, documented and properly integrated into the buyer’s activities. Non-financial areas such as Reporting Systems, Internal Controls, and Quality Assurance cover wide areas in the both companies. These will need extensive checklists to assure that nothing is overlooked and that new requirements are identified and put into place.

Checklists are not static but are dynamic and ever-evolving. They are developed for each activity within the company. They are the index from which detailed projects may emanate. Such projects will encompass the detailed tasks and sub-tasks to accomplish the integration in a complete and timely manner. Checklists for integration will also begin to give an indication of the magnitude of the integration project. Properly laid out as a project plan, with the resulting Gantt charts and personnel requirements, the timeline for implementation will be presented in a manner that allows thoughtful and thorough management and reporting. Automation is the prerequisite given the magnitude of the integration activity. It assures the project is completed on time, on budget, and achieves the desired synergistic benefits. With the appropriate M&A Integration Management System, the checklist can be utilized to develop the best work-plan, and assure that all of the project’s information is captured in a repeatable system for future use.

Learn more on how to run a successful M&A on our M&A Management Playbook and Toolkit page.

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