Post-merger integration or PMI is a complex process of combining and rearranging businesses to materialize potential efficiencies and synergies that usually motivate mergers and acquisitions. The PMI is a critical aspect of mergers; it involves combining the original socio-technical systems of the merging organizations into one newly combined system.
The process of combining two or more organizations into a single organization involves several organizational systems, such as assets, people, resources, tasks, and the supporting information technology. The process of combining these systems is known as 'integration'. Integration Planning is one of the most challenging areas to address pre-close during a merger or acquisition. Even though culture clash between companies can cause integration problems, only 4% of the executives in a survey by Pritchett, LP reported that their organizations include culture-specific questions in their due diligence checklists. Culture specific due diligence may include cultural screening and creating a cultural profile of the target firm. GE Capital conducts a cultural assesment of prospective candidates against metrics such as trust in existing managers, language barriers, and operating processes to then facilitate a culture work out session between both sides. Lee Marks, Mitchell; H. Mirvis, Philip (December 2011). "A framework for the human resource role in managing culture in Mergers and Acquisitions". Human Resource Management. 50: 859–877.
The integration management office, or IMO, manages core functions of the integration effort and provides structure for integration delivery. In a survey by Global PMI Partners of 143 M&A executives, 67% of respondents incorporate IMOs during an acquisition on at least half of their initiatives in a cross-border setting.
Integration often requires a daunting degree of effort and coordination, but when done well, companies may deliver as much as 6 to 12 percentage points higher total returns to shareholders (TRS) than those that don’t.
Integration fits within an organizational lifecycle or specific business mergers and acquisitions cycle where businesses buy, integrate, then dispose of businesses:
- Definition of vision & strategy
- Selection of growth method: organic vs inorganic
- Target identification
- Pre-deal evaluation & due diligence
- Negotiation & deal completion
- Post-merger integration
- Acquisition integration
- Ongoing improvement
- Mergers & acquisitions
- Business acquisition
- Program management
- Project management
- Change management
- Corporate finance
- Management due diligence
- Anthony F., Buono; Bowditch, James L. (1989). The human side of mergers and acquisitions: Managing collisions between people, cultures, and organizations. San Francisco: Jossey-Bass Publishers. ISBN 1-55542-135-0.
- "Merger Integration Due Diligence". Dr. K.M.Popp. Retrieved 2014-07-21.
- M&A Transaction Survey of 50 executive M&A respondents (2013); ModalMinds Inc.; http://modalminds.com/modality/ma-transaction-survey-results/
- Pritchett LP (2018), Corporate Culture: The "X Factor" in Merger Success and Failure; https://www.mergerintegration.com/corporate-culture-x-factor-merger-success-and-failure
- Hofmeyer, Stefan; Whitaker, Scott C.; et al. (2016). Cross-Border Mergers and Acquisitions. Hoboken, New Jersey: John Wiley & Sons, Inc. ISBN 978-1-119-04223-5.
- Global PMI Partners, Cross-Border M&A Integration Survey, November 2015; http://www.gpmip.com
- Doherty, Rebecca; Engert, Oliver; West, Andy. "A Billion Dollar Successful Separation". Transaction Advisors. ISSN 2329-9134.