Do You Really Need a PMI Plan?
- Author Lilly Stevens
- Published November 24, 2019
- Word count 610
Summary: Discover the significance behind the merger integration plan and why you should have one.
Do you need a PMI Plan? Yes. Absolutely!
The post-merger waters can be very rough for the acquiring company. You have to figure out how to enforce your corporate culture, or if you will shift it. You must make your employees feel secure, or deal with eliminating positions, and you have to determine how much of the business will be integrated into the acquired business and how much will remain separate. If you don’t have any of this planned, or don’t have contingencies in place for potentialities, you could find yourself and your business losing profits due to poor efficiency. A merger integration plan is a must.
The sooner the better
If you are on the hunt to merge or acquire, then you likely have targets in mind. Your merger integration plan should begin as soon as your target business is identified. The sooner you start planning the merger and the PMI phase, the better prepared you’ll be and the greater the likelihood of a successful deal and PMI phase. At this time, so early on, you will have the space you need to identify your top-tier people and assign them appropriate PMI responsibilities, which will help things flow smoothly. If you do it in a rush and put the wrong people in charge of the wrong things, it can be a disaster.
Corporate culture is a big deal
Don’t overlook how combining two companies may impact your corporate culture. Corporate culture helps to define your expectations of your workforce, and guides the workforce by giving them limitations as well as the expectations they need to meet in order to be successful. Do they need to meet quotas? Are there certain operating procedures they need to adhere to? Are their bonuses that can be earned? How is that reward achieved? Defining all of these things helps employees stay focused and not lose momentum during the merger process. When people are unaware of their responsibilities, or get too caught up in the excitement of a change, their performance can slow, and with it, your revenues.
Consider synergy too
Although acquiring a new business may save you money in the long run (depending on if you are growing vertically or horizontally), you need to consider the synergy of the deal too. Synergy is the revenue growth anticipated from a merger. In other words, Business A is worth this much alone, and Business B is worth this much alone, but when we combine they are worth more than double what they were as stand-alone businesses. This created value produced by a merger is known as synergy, and it should always be a consideration when developing your M&A target list. Getting a good ROI, depending on your growth strategy, can take a long time to realize when you are relying solely on the day-to-day business you do. If you make a deal that produces good synergy, you can see that ROI realized much sooner. A merger integration plan should include an ROI time-frame.
Put a timeframe on your integration
Have a merger integration plan, but give it a deadline. Plan a step-by-step PMI plan that wraps up in a set amount of time, say 90 days. Make your new business aware of the plan, and begin laying out steps so that everyone knows there really is a plan for moving forward. Not only can you milestone your integration progress and success, but it’s a way for you to put checks in the boxes and ensure every little merger integration detail is being attended to.
Never underestimate the important go a good plan, especially a merger integration plan. If you provide employees with a clear roadmap to follow, you won’t lose revenue due to sluggish productivity. Contact firms that provide business analysis services, like The Burnie Group, to learn more.Article source: http://articlebiz.com
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