Copyright © 2013, Whitaker & Company, Inc.

Top 10 Integration

Mistakes and How to

Avoid Them

Introduction

Integrations are disruptive. Period.

Expect your integration to disrupt operations and hamper business continuity.

Do not underestimate the preparation and work required to manage a

successful integration-they can be ugly, time consuming, and contentious.

Prepare for the worst, and expect the best as they say.

The following paper outlines 10 fairly typical mistakes and provides some

advice on how to avoid them.

# 1: Lack of Pre-Planning

Lack of adequate pre-planning is one of the leading causes of poorly executed

integrations. When integrations fall short of their objectives, 70% of the shortfall is

linked to inadequate integration planning & execution

Symptoms and Signs

No formal integration oversight authority or responsibility established

Limited or no risk assessment activities completed

Incomplete due-diligence documentation

No confirmed closing date

Confusion and anxiety among employees

Potential Outcomes

Integration gets off to a slow start and never recovers

Failure to deliver on synergy targets

Employee morale and retention issues

Customer defections

Major disruption to business continuity

Establish Integration Management Office (IMO) at least 30 days prior to deal close

Draft integration strategy to help prioritize workstreams

Complete operational and cultural risk assessments

Secure access to due-diligence documents

Draft integration charter and confirm governance (IMO should report into C-suite executive)

Confirm talent assessment process (if required) and get documents completed by Day 0

Steps to Address

# 2: No Formal Integration Strategy

Integration managers must ensure alignment between a company’s operating

strategy and the integration strategy to make sure your team is “integrating with

the end in mind”

Symptoms and Signs

NewCo operating model still in flux or undefined

Organizational structure still TBD

Integration objectives undefined or nonexistent

No executive support for integration resources

Potential Outcomes

Integration efforts may be incongruent with operating strategy

Limited to no ability for functional leads to prioritize integration workstreams

Integration will take longer than expected, and may even require a “do over”

Inability to deliver on synergy targets

Complete integration strategy strawman to help solidify direction and secure buy-in from executives

Complete integration risk assessments to inform strategy

Develop integration workstream prioritization framework

Establish Integration Management office (IMO)

If needed, help clarify business objectives to inform integration strategy

Steps to Address

# 3: Failure to Prioritize Workstreams

Without workstream prioritization, every functional integration plan and workstream

will be considered as important as the next, and it will be difficult to focus on high

priority workstreams that can deliver the most business value

Symptoms and Signs

Integration work feels overwhelming to most functional leads

Functional leads continually requesting more info on integration strategy and objectives

Senior management anxious regarding integration progress

Too many “low value” workstreams

Potential Outcomes

“Low value” workstreams dominate activity

Integration milestones slip

Synergy realization negatively impacted

Functional leads get frustrated and deprioritize integration work

Senior management becomes frustrated with integration progress

Ensure integration strategy, objectives and timetables have been communicated

Create integration workstream prioritization framework to assist functional leads

Where applicable, assign specific synergy or business benefit values to high priority workstreams

Make sure IMO office reporting output for senior mgmt focuses on high priority workstreams

When necessary, deprioritize medium/low priority workstreams if functional leads are having difficulty managing their workload

Have IMO office personnel assist with functional workstreams

Steps to Address

# 4: Senior Leadership Void

Integration Management Office and leaders need to report into a C-level executive

to ensure consistent focus and accountability. Also, IMO offices frequently need an

expedient escalation and issue resolution method to manage conflicts

Symptoms and Signs

Integration managers or IMO office reporting into a single function like HR or Finance

Confusion at senior executive level as to who “owns” the integration work

No sense of urgency among integration leads

Fluid post close organizational structure may mean senior executives are still “TBD”

Potential Outcomes

Integration work is deprioritized among functional leads

Negative impact on communication planning as no central office can be used as a pivot point for integration updates

Failure to achieve synergy targets within the specified timeframe

Lack of “quick wins” and success stories

Accelerate post close organizational planning to solidify leadership structure

Establish charter and governance from C-level office during pre-planning

Establish IMO as transparent extension of designated C-level executive’s office

Create issue escalation and decision making framework for senior executive team to ensure high priority issues get “moved up the chain” quickly

Steps to Address

# 5: Poor Communication Planning

Frequent communication to all stakeholder audiences is one of the hallmarks of a

sound integration plan. Poor communication planning can negatively impact

morale and even slow your integration down as people clamor for information

Symptoms and Signs

Executive communication reactive vs. proactive

Lack of established communication vehicles for acquiring organization

Limited risk assessment prework to determine high priority communication needs

Information sharing to date on as “as needed basis”

Potential Outcomes

Employee morale negatively impacted as they are “kept in the dark”

Customers confused as to next steps become prime targets of competitors

Employee defections (good people leave when they feel they are not valued)

Integration energy spent on reactive issues and putting out fires

Solidify key messages for each key stakeholder audience in advance of Day 0

Create communication plan matrix for Day 0 thru 90 days

Establish communication channels and vehicles (if needed-create new ones to support the integration)

Draft communications for senior executives to speed execution

Create simple but effective “rolling FAQ log” that can be updated weekly and shared with affected employees

Steps to Address

# 6: Poor Synergy Program Management

Synergies are typically one of the most important reasons why companies

undertake mergers and acquisitions in the first place, but companies fail to achieve

projected synergies over 50% of the time!

Symptoms and Signs

Synergy estimates are inflated, overly optimistic, and/or lack costs to achieve budgets

Timeframe to achieve is unrealistic

No formal executive or functional ownership of synergy targets

No connection between synergy targets and integration workstreams

Potential Outcomes

Deal fails to deliver on targeted value

Cost overruns due to poor estimates for CTA (costs to achieve)

Delayed integration timeframe

Synergy targets get dispersed among functions and become impossible to properly monitor and track

“Stress test” synergy targets during due-diligence to confirm projections and rework if necessary

Confirm cost to achieve (CTA) budgets

Confirm which synergy targets are the responsibility of the Integration Management Office

Confirm frequency and source of synergy reporting updates and coordinate delivery with IMO

Make sure synergy workstreams are clearly accounted for in functional workstreams

Ensure synergy related workstreams are always marked high priority

Steps to Address

# 7: Inadequate Resourcing

Integrations require dedicated time and resources, and poorly resourced

integrations and take longer, cost more, delay synergy realization and can burn

good people out

Symptoms and Signs

No formal scope or governance to guide resource planning and set expectations

Integration work treated as “second priority”, and everyone’s “day job” overwhelms integration work

No air cover from senior executives to support the need for dedicated resources

Good people avoiding integration work

Potential Outcomes

Delayed integration timeframe

“Revolving door” for functional integration leads

Burnout and resentment of integration work

Failure to achieve synergy targets

Failure to establish reliable resourcing requirements baseline for next integration

Create integration charter with formalized functional resource expectations and timing

Create job description summaries for functional leads

Scope and prioritize integration workstreams so functional leaders have a solid understanding of the level of effort and time required to complete integration work

Secure external resources to offload special projects and other integration work

Document time and resource expenditures to establish baseline and set expectations for next integration effort

Steps to Address

#8: Lack of “End State” Transition

Every integration needs to have an end. Planning for your end state is just as

important as planning the integration itself

Symptoms and Signs

Functional “end state” is undefined, confusing and functional leads are frustrated

No formal end date where bulk of integration activity should be concluding

Integration work and regular work is intermingled-making “end state” an impossible thing to define in the first place

Potential Outcomes

Delayed integration timeframe

Integration work becomes functional work and vice versa…meaning integration workstreams get deprioritized

Open ended integration workstreams become huge headaches for functional leads

Develop formal end state transition process with anticipated timing and clarified roles and responsibilities

Document deadlines and deliverables associated with the remaining open items

Make sure open integration workstreams are documented and handed off to functional leads via a formalized transition

Provide a full understanding of what has to be done, by when, and by whom. Make sure people have an understanding of the negative implications should the project get delayed

Steps to Address

#9: Poor Organizational Planning

Organizational design is a critical part of any “Newco” merger scenario, and poorly

planned and executed transitions can have adverse affects on the new entity

Symptoms and Signs

Competing business models and priorities linger well after merger closes

Too many executives and key leaders unsure of eventual role and responsibilities

Poor communication to rank and file regarding Newco organizational design and leadership structure

Potential Outcomes

“A” Players depart as they become frustrated with dysfunction and lack of communication

Temporary business strategies and practices become “hard coated” due to delays in solidifying new org design and leadership

Employees become demotivated and morale suffers due to fear of the unknown

Clarify Newco business strategy and operating principles as soon as possible

Accelerate organizational design and the “naming” of key executives-making it a high priority workstream

Make leaders aware of risks and side affects of delays-keep them informed and updated as to the consequences of delayed decision making

Make decisions on workforce reductions early and expedite the position elimination process so affected employees can quickly return to focusing on their work, or transitioning out of the company

Steps to Address

#10: No Formal Measurements

Collecting feedback from all stakeholder groups to continually optimize your

integration process is critical for making integration a core competency in any

organization

Symptoms and Signs

Information on previous integrations is confusing, hard to locate, and/or non-existent

“Feedback” is all via rumor mill and informal communication channels

No established process to address and correct poor practices

Potential Outcomes

Integration competency becomes “static”, never improving and most often getting worse

Employees feel they have no voice in helping improve execution and become passive

Acquiring company gets reputation as being insensitive and irresponsive to employee concerns

At day 100, initiate a formal process to collect feedback from Integration Manager participants and acquired company employees

Do a employee survey developed and administered through HR and implemented after any downsizing or RIFs (reductions in force)

Be sure to include a sample from: Senior management, Integration office (IMO) team members, Employees (from both companies), Consultants involved in project (if applicable)

Make sure the Integration Manager facilitates a “Lessons Learned” meeting with Integration Manager participants and functional leads to create an after action review document

Steps to Address

Whitaker & Company Overview

Whitaker & Company is an Atlanta-based consulting firm

specializing in post merger & acquisition integration.

Since 2005, Whitaker and & Company has been involved in

merger integration engagements totaling over more than $25

billion for both domestic and international companies. We help

companies realize the full value of their mergers and

acquisitions via a full array of solutions and services

Whitaker & Company President Scott C. Whitaker is an

accomplished executive with expertise in corporate strategy

and operations with Fortune 500 companies, and is the author

of Mergers & Acquisitions Integration Handbook: Helping

Companies Realize The Full Value of Acquisitions, a

comprehensive resource to help companies create a scalable

post merger or acquisition integration process that accelerates

operating and business benefit goal realization.

For more information contact info@whitakercompany.com

Thank You!

For more information contact:

Info@whitakercompany.com