After trouble shooting one international acquisition, completing another and assisting in others I have a few warnings for those of you contemplating all of this fun.
Aside from the obvious Financial, and IT integration challenges, here are a few of the things I have seen go astray (followed by some recommendations). (We will assume here also that you have figured out if there has to be any supply chain, engineering or manufacturing integration - I will deal with the hidden problems in admin, sales, service, marketing etc.)
Legal - Papering the transaction and handling branding, copyrights, patents, registered names, web sites and the like may be the easy piece even if there are subsidiaries and international locations involved. A bigger legal challenge is the employment status, contracts and legal requirements of each country/state/province. In my experience Europe is much more problematic than Asia in this regard so watch out. Get legal help in each jurisdiction,. Put someone in charge who can separate the noise from the data (is a car plan for sales reps in one country really a show stopper in the plan) and budget for this in your acquisition plan. Be ready to be surprised. Some countries are really labour friendly and do not like off-shore executive teams
Who took over Whom: Even though Company A acquired Company B, there may be locations, divisions or departments where Company B has more employees, more senior management, sophisticated processes, market penetration, etc. These operations often come to believe that THEY have taken over Company A at least in their molecule and they plan even unconsciously on having things their way. Acquired employees will often rally around a previous leader in the organization .. one whom they may not have appreciated or even liked pre-acquisition. This trend must be nipped in the bud with clear messages on the integration plan and objectives. If a reticent leader is detected he/she must be neutralized by making them responsible for the success of the integration or more frequently getting rid of them quickly. I ran into a case where two years after an acquisition a subsidiary was still working under the previous company name, employees wore uniforms of the previous company and would only take direction from a previous leader.
Speed, Pain, and Sabotage: The more ‘public’ process that is put into the integration, the more it gets politicized, challenged and dragged out. The plan must be ready and where possible the ‘results’ of the process are discussed with employees. There is little room for bottom up democracy in an integration plan. You need to go into week one with a professional plan and execute it very quickly to avoid conflict and pain that drags on. Employees whether they admit it or not would rather have swift action and a sense of ‘its over’ rather than a long drawn out process that seems on the surface to be more fair..
Paralysis: Manager’s of Company A are often relied on to drive the integration (even while a beauty contest is underway - i.e. deciding which managers stay or go through some evaluation process) With this challenge they can become completely consumed with integration issues. They also take the blame for everything that falters during the integration but the much bigger issue is the question of who is running the business while they are integrating. One company I worked with hired an outside consulting firm to quickly write and execute the staffing integration plan. Dollars wise it was expensive but it all happened fast and the culprits were soon gone.
Product and Service portfolio: Overlapping products or services are almost never sustainable. Speed is of the essence here because tree huggers will build obstacles to change as soon as they feel threatened. In most cases it is best to pick a horse to run with and take the penalty of dropping an offering. One company I worked with took a year to make this decision thinking they were keeping their customers happy only to have to renege on promises to keep products alive.
Communications: The first and last issue in most companies. You can count on every wild rumour taking hold if you cannot get out in front of it. Whether it is internal communications or the messages that go to your customers and the market you must be in control of the information. I prefer weekly employee meetings in groups up to 100 per location with the floor opened to all questions. Customer/partner road shows are also a great idea if it fits in your business.
Final thought: The problems in integrating an acquisition can be much greater than you expected. The key is to assign key people FULL TIME and on a short schedule. Have them build a defensible plan based on the needs of the business and execute quickly. Be prepared to defend (but not debate) the ‘fairness’ in your process. Finally, be sensitive to the disruption of employees, communicate realistic expectations to them early, explain/defend your actions and tell them it is now over and we are now on to normal business operations. The longer an integration takes the higher its probability of serious problems.
Talk to someone who has done it before!