Avoiding overconfidence in the high‐stakes game of M&A integration

Abstract

Purpose

The field of M&A management remains a work in progress. The principles and practices for effective integration are only partly codified and imperfectly understood. Even with respect to the techniques that are known, it's possible to lose something in the translation and jeopardize a deal through misapplication.

Design/methodology/approach

Eight examples illustrate how certain formulas for success can be true as far as they go, yet be potentially misleading or even counterproductive.

Findings

Companies integrating organizations after an acquisition should avoid overpromising, define in advance how the NewCo is to look and function once integration is complete, resolve political issues early, adjust the integration master plan as the process goes forward, ensure that every segment of the organization is appropriately engaged in the integration effort throughout, focus on revenue preservation rather than revenue enhancement during the early stages, document the baseline against which synergy achievements will be evaluated, ensure that essential tasks are completed even if that means accepting solutions that are “good enough” rather than perfect, and maintain momentum after Day One.

Originality/value

The most sophisticated M&A team may be just one deal away from a major misstep. Executives should resist the temptation to assume their organizations possess the whole truth when it comes to M&A management, and approach each deal with the wary conviction that we all have much to learn.

Citation

Renjen, P. and Allen, D. (2007), "Avoiding overconfidence in the high‐stakes game of M&A integration", Journal of Business Strategy, Vol. 28 No. 6, pp. 13-17. https://doi.org/10.1108/02756660710835860