Integrating an acquisition is not an easy task – there are often many challenges associated with the integration process. This article explores some of the key challenges.
Structural challenges relate to the hierarchy, reporting relationships, and compensation structure. Each firm will have two separate structures which will need to be combined with one another. Depending on the extent of the integration process, bosses may change and compensation may be adjusted.
Structural integration is not easy – people do not like uncertainty or change and the integration process will inevitably involve a lot of uncertainty and changes. Not everyone is likely to be happy with decisions made – some people will inevitably feel likely they have got the worse side. Yet, structural integration is important – without considering how you will integrate the structure of the firm, it is hard to move forward with operational or cultural integration.
Another set of challenges is associated with integrating the operations of the company. Different firms will have different ways of operating – different processes, routines, communication channels, and IT infrastructure. Each of these activities will need consideration to determine whether and how the two original systems will be merged together.
Integrating the operations of the firms is important – particularly if the purpose of the acquisition was to reduce costs. Without integrating the operations of the firm, potential savings from removing duplication are unlikely to be realized.
It is easy to overlook how complicated the process of merging different approaches together can be. Integrating databases and computer systems, for example, is no easy task – but one that if not completed results in the firm reading to maintain two separate systems, with different training requires to work on the different platforms.
A final challenge associated with integrating an acquired firm is how to merge the two cultures together. Particularly if the two original cultures are very different from one another, two sub-cultures can persist within a merged firm. Everyone remembers which side of the business you originally came from, and in turn, has expectations about how you will behave.
Cultural integration can however be important – culture influences how employees behave, and differences in culture can result in two different sets of behaviors depending on which part of the business you are in. Cultural classes scan increase politics – clashes between different parts of the business, both during the acquisition integration processes, and also post acquisition.
Integrating cultures is not an easy process. Just as cultures are not easy to change, it is not easy to set or enforce a culture on an acquired business. People may resist attempts to impose a culture on them. If acquiring a firm, recognize that it may take many years to achieve cultural integration.