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April 25, 2023 5 minute read

How Integration Managers Bridge the Knowledge Gap Between Diligence and Integration

We see this statistic all the time, but do we understand why 70% to 90% of all mergers and acquisitions (M&As) do not achieve their strategic and financial objectives? Of course, this is not surprising when you consider the complicated process of integrating two different companies and their systems, processes, and culture. 

One major mistake acquiring companies often make is failing to have someone who can bridge the knowledge gap between the diligence phase, where information is gathered and analyzed, and the integration phase, where plans are executed. To counter this issue, savvy companies often appoint an integration manager to lead everyone through the challenging and unfamiliar terrain that two merging organizations must navigate in order to operate as a cohesive unit. 

Understanding the Knowledge Gap

During an M&A deal, the acquiring company needs to conduct due diligence to assess the target company’s systems, operations, financials, culture, and other relevant aspects. This process helps to identify opportunities, synergies, potential risks, and challenges that might arise during integration. 

After the deal is closed, the integration process begins. Here, the acquiring company starts implementing the insights and information gathered during the diligence phase. Some examples of integration strategies include establishing communication and collaboration channels, consolidating systems and processes, and managing cultural integration.

The knowledge gap between diligence and integration in M&A deals refers to the challenges of transferring and utilizing the information gained during the due diligence phase. This gap can arise due to various reasons, such as:

  • Failure to leverage due diligence findings in the integration efforts.
  • Lack of proper knowledge management processes or tools.
  • Incomplete or outdated information collection.
  • Failure to appoint someone to lead the integration process.

The Role of Integration Managers

The stakes are high when integrating a business, so it takes a special person to plan, coordinate, and execute the integration process and help achieve the desired objectives. 

For smaller deals, an integration manager might be solely responsible for overseeing the integration process. In other cases, the integration manager commonly has an integration management office consisting of members from both the acquired and acquiring parties. 

Overall, here are some of the key functions of integration managers: 

Building Communication and Collaboration Strategies

Integration managers establish clear lines of communication between all the relevant stakeholders in an M&A deal, including executives, employees, and external partners. At all times, the stakeholders are informed about the progression of the integration process. The integration manager will also promptly handle any concerns or questions the stakeholders might have to ensure a seamless process. 

At the same, integration managers foster a collaborative culture among the integrating teams to encourage knowledge sharing and cooperation. Since most integrating parties have diverse members with different cultures, backgrounds, and working styles, collaboration and teamwork should help to promote inclusivity, maintain positive relationships between teams, and find solutions that meet the needs of all the parties involved. 

Creating a Detailed Integration Plan

Integration requires highly tactical efforts. The tactics used by the integrating teams should capture and uphold the value of the deal. To accomplish this, the integration manager develops and documents a detailed integration plan, outlining when and how to combine major processes, assets, and resources of the merging companies. 

The integration plan defines the steps and activities the teams will take so they can see the work ahead and prepare. It also helps to align the employees’ expectations, which can help to replace their skepticism with optimism.

Conducting Due Diligence

Before the integration process, the parties should understand the opportunities and risks within any potential M&A deal. Integration managers conduct thorough and robust due diligence to deliver the insights and information needed to make informed decisions during the integration. The strategies used in the integration plan will address the opportunities, risks, and challenges identified during the course of the due diligence. 

The methods used to conduct due diligence typically differ depending on the type of deal and transaction. These methods include reviewing financial statements, management and operations, partnership agreements, existing contracts, annual reports, tax filing, and legal compliance. 

Gathering and Analyzing Data

Quality data helps any integrating teams to maintain unbiased visibility into organizational performance, while analytics helps them to keep a strategic eye on set goals and capitalize on opportunities quickly. Integration managers in particular use their expertise in data management and analysis to gather and analyze relevant data from various sources, informing decision-making and ensuring smooth integration. They have many means of doing so, including:

  • Conducting a comprehensive data inventory and mapping exercise to identify and categorize all relevant data sources within the companies involved in the deal
  • Applying data integration techniques to consolidate data from different sources into a unified system or database. 
  • Identifying gaps or risks in the data that may affect the integration process or the outcomes of the deal.
  • Collaborating with other departments, such as finance, HR, finance, IT, and legal departments, to collect data and incorporate it into the integration plan.
  • Providing reports and updates on data-related activities to the other relevant parties to promote transparency and accountability.
  • Continuously monitoring data performance during the integration process to ensure data accuracy and consistency.

Implementing Integration Strategies

Integration managers oversee the execution of the integration plan, including coordinating and managing the specific tasks outlined in it. They ensure the integrating teams are following the plan, meeting deadlines, and working to achieve the goals included in the integration strategy. They also collaborate with the relevant departments to obtain the necessary resources, such as financial resources, human capital, and technology, helping the integrating teams to follow the set strategies.

In addition, integration managers are responsible for change management. M&A deals often come with many changes, including new roles, new routines, and new systems and tools. Some employees may resist these changes due to, for example, fear of job loss. Integration managers can manage the transition and promote acceptance of changes among employees by communicating these changes in a timely fashion, addressing any concerns, and providing support to employees so they can adapt to the new changes.

Monitoring the Integration Process

Implementing the original integration strategies often isn’t enough. Integration managers continuously track the progress of the set initiatives. This helps them identify gaps or challenges early and take corrective action. 

One way integration managers monitor the integration process is by planning regular progress meetings with cross-functional teams and key stakeholders. These meetings help them to review the status of various integration initiatives, keep stakeholders informed about the progress and outcomes of the integration process, and seek feedback from those involved. Moreover, integration managers establish a reporting and documentation system to capture the status of the integration process, making it easier to track progress. 

Utilizing Tools and Technology for Knowledge Management

To effectively bridge the knowledge gap in M&A deals, integration managers leverage various tools. These include: 

  • Collaboration and communication tools for real-time communication and document sharing among integrating teams.
  • Data and analytics tools to gather, analyze, and interpret data related to the integration process.
  • Due diligence software to ensure that all relevant information is captured during the integration process.

Bridge the Knowledge Gap Between Diligence and Integration With Devensoft

Are you an integration manager struggling to bridge the gap between due diligence and integration in M&A deals? Navigating the complex world of mergers and acquisitions without the right tools and systems can be challenging. But fear not because Devensoft has your back!

Our cutting-edge software solutions are designed specifically to support M&A leaders in their due diligence and integration efforts. With our robust platform, you’ll have everything you need to effectively manage communication, collaboration, and data analytics, streamlining the integration process and maximizing the value of your deal.

Say goodbye to the headache of managing multiple spreadsheets and clunky communication systems. With Devensoft, you’ll have all the tools you need to make your M&A deals successful. Schedule a free demo today to learn how Devensoft can help you leverage the information gained from due diligence for successful integration. 

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