Did you know that 70%-90% of mergers and acquisitions fail even after successfully going through the due diligence phase? It sounds a bit strange, but post-merger integration woes still haunt the dealmakers. Imagine the dealmakers and the companies did all the hard work, and the transaction still failed. All the business financial modeling, data analysis, feasibility reports, and due diligence will have zero effect just because of post-merger integration failure.
However, it doesn’t mean that the corporate world is not doing anything to address integration problems. For example, the emergence of IMO (integration management office) is a major step towards smooth post-merger integration.
What exactly is IMO? What is its role in mergers and acquisitions? You will have your answers in the following text. Also, you can learn about digital tools like virtual data rooms that help companies automate M&As.
What is a post-merger integration team?
Post-merger integration teams or IMOs are a group of people (hired or nominated by the acquirer) responsible for managing the post-merger integration process.
Although a merger between two similar companies may look simple on the surface, things like cultural differences, behavior towards change, and interaction with new stakeholders, processes, and internal systems create friction between two companies.
A post-merger integration team’s job is to minimize that friction and help the acquirer complete the integration process as smoothly as possible.
Members of post-merger teams/IMOs
Normally, an IMO has the following members:
- An IMO manager with prior experience in managing similar integration projects. The IMO manager’s job is to oversee the integration process.
- Legal counsel that provides legal advice on issues or disputes that may arise in the post-merger phase.
- Industry specialists that help companies (from different industries or market segments) to answer or settle technical questions/queries.
- Functional team leads that include leading members from different departments such as finance, sales, marketing, HRM, etc.
Role of post-merger integration teams
The role of IMOs may vary, but the following are some common responsibilities of post-merger teams:
- Develop overall integration plans that may include communication plans, all integration projects, and synergy benefits.
- Manage different integration processes and people such as issue management, work plan reviews, stakeholders communication, acquired company management, functional resource owners, and executives status updates.
- Provide assistance and address unforeseen issues that may arise in different functional areas as soon as they surface.
- Ensure smooth cross-functional collaboration (i.e., coordination between different functional units such as finance, HRM, marketing, sales, marketing, etc.).
How online data room software streamlines M&As and post-merger phase?
Virtual data rooms have done a remarkable job by simplifying different areas in mergers and acquisitions, and no wonder they are the most used solutions in the M&A industry. Here is a short introduction to online data room software and its role in M&As.
What is a digital data room?
A digital or M&A data room is a secure, cloud-based digital document repository and data management solution that streamlines data sharing, storage, distribution, team/project management, and online communication in M&As and similar transactions.
Many organizations worldwide use data rooms for simplifying the process of post-merger integration. In fact, Terry Snyder, Co-Founder of datarooms-review.com, mentions that “Virtual data rooms make sure that IMOs have flawless modes of communication, improving both the transaction and the final outcome.“
To explore more about M&A data rooms and notable vendors, follow: https://datarooms-review.com/m-and-a/.
Importance of virtual data rooms in M&As
Smooth, timely communication is key during and after the post-merger integration phase.
Data rooms provide a central platform for stakeholders, dealmakers, boards, IMOs, facilitators, investment bankers, etc., to communicate safely and freely. VDRs offer Q&A modules for real-time question/answer sessions. Here are some other major benefits of VDRs.
Security is probably the biggest challenge for businesses and dealmakers during mergers and acquisitions. It is not just about external threats such as hackers or cybercriminals. Companies are reluctant to share sensitive information with dealmakers and acquirers without any secure channel.
Virtual data rooms give them the confidence to share such confidential files with full control. Digital watermarking, audit trials, NDAs, 256-bit data encryption, multi-factor authorization, activity and file tracking, and fence-view mode are some modern-day features used in VDRs to prevent data theft.
Whether it is due diligence or post-merger integration, online data room software is used as a central point for online meetings, brainstorming sessions, Q&A sessions, document sharing, annotations, and group or one-to-one communication.
Cost and time saving
VDRs save both time and cost. For example, there will be no repeat requests or task duplication. Access to any VDR file is just a few clicks away from data room users. They can schedule file sharing and send files in bulk, and that too to multiple users at once.
Similarly, digital data room software almost eliminates the need for paper documentation and physical meetings or trips for data verification. iDeals, DealRoom, Merrill, and Intralinks, are some of the best data room services in the market.
Successful M&As with IMOs — parting words
Post-merger integration teams boost the chances of successful integrations by ensuring cross-functional collaboration, tackling unforeseen issues, and efficiently managing different processes in the integration.