Explain the concept of Post-Merger Integration (PMI)

Banking & FinanceFinance ManagementGrowth & Empowerment

Post-Merger Integration (PMI) is a process of merging two or more firms/organizations/companies to increase synergies and reach their forecasted value.

Top executives, stakeholders, team members, Human Resources (HR), new management will take responsibility for post-merger activities. There is no period to complete the deal.

Every merger has their own time frame (may be months, years).

Post-Merger Integration (PMI) includes the following −

  • Recruiting process − Based on short, long term needs, process and compensations.
  • Overlap − Includes layoffs, benefit forms, securing top employees.
  • Technology − Includes merger systems and new organisation charts.
  • Performance − Includes training to employees, documents for review etc.

Areas

The areas that come under the Post-Merger Integration (PMI) are as follows −

  • D&K  −Integration of data and knowledge (D&K) of the merged companies (customers, products etc.)

  • T&S  − This refers to Technology and Systems, which are combined by the new strategies.

  • Policies − New internal policies are formed (salaries for existing employees, benefits, recruiting new employees).

  • Procedures − Discuss the strategies to take forward the newly formed business (operations).

  • Culture − New culture is decided regarding working hours, week offs, leaves etc.

  • Structure − New organizational structure will be formed, either by merging of the departments or sharing responsibilities.

  • Services − To carry forward their brand values as a single value, they discuss whether to carry forward their existing products, make adjustments/modifications, or go for new products.

Types

The types of Post-Merger Integration (PMI) are as follows −

  • Absorption − One company absorbs another company fully.

  • Symbiosis − One company acquires another company limited to certain areas.

  • Preservation − One company acquires another company limited to financial information only and the targeted company keeps their self-governing.

  • Holding − One company acquires another company only to hold ownership but not to integrate.

Steps

The steps for the Post-Merger Integration (PMI) are as follows −

  • Begin integration − Start planning about the integration process, before the deal was announced, implement the process as soon as integration was announced.

  • Build a team − Build a team from both the companies for choosing the right employees, who are experienced and motivated. This team is capable of taking heavy workload and pressure to ensure the integration is completed smoothly.

  • Structure − Based on an area of expertise, employees are tasked to outline and perform the process in their domain.

  • Communication − Culture, roles in the organization are redefined to make employees comfortable in the new organization.

  • Transaction − Messaging is more important in a new organisation and it should clearly explain the new objectives, goals, changes etc. to their employees to avoid a stressful environment.

  • Exit plan − Each department will come up with a plan, when the integration process will complete in their areas. Key departments like finance, HR, legal, sales, IT, operations, marketing need this plan.

raja
Published on 13-Jul-2021 13:43:51
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