What is Post-Merger Integration?

Group of executives sitting at a conference table discussing what is post-merger integration and requirements for their team.

Posted on

June 18, 2020


For two companies to merge, leaders of both organizations have to put tremendous effort into orchestrating the details of the deal. But the work doesn’t stop once the agreement is signed. In fact, the most important work comes afterwards, in what is known as post-merger integration. 

What is Post-Merger Integration (PMI), Exactly? 

Post-merger integration is the nuanced process that takes place after two large companies agree to combine their resources and begin operating as one entity. For example, the new company may need to eliminate redundant or competing positions or reorganize teams. For many organizations, the post-merger integration is often complex. After all, you are renovating the fundamental operating structures of both businesses to suit the new goals of the larger organization. As an HR professional, you will likely need to take a key role in the integration, reorganization, or displacement of entire departments, as well as conducting layoffs and redistributing responsibilities to newly-formed units. What is post-merger integration going to require from you and your team?

Structuring Your Team 

Roughly a quarter of all proposed mergers underperform or fail because there is no clear conception of the fully integrated company. What is post-merger integration but a chance to set your company up for success? Post-merger integration succeeds when it is building toward a shared vision. Much as a contractor can’t supply the necessary materials to build a house without clearly drawn blueprints, a PMI team requires a step-by-step process that takes into account the complexity and function of the final corporate structure. As an HR professional, take guidance from the PMI’s steering committee so you can be sure that your specific actions align with this larger plan. Select integration team members based on how quickly and effectively they can communicate with others while keeping the goals of the merger and acquisition process in mind.

It’s helpful to understand what kind of post-merger integration your company is undertaking. What is post-merger integration likely to look like when the merger was driven by a desire to combine costs versus the need to reach new markets? Once you know the answer to this question, the easier it will be for you to choose suitable team members and help implement changes.

What are the Best Strategies for Different Types of PMIs?

Let’s say your PMI is based on opening up new markets. In that case, the PMI should encourage the market-friendly company to continue its operations without undue micromanagement. 

Imagine that you work for a large social media company that has just acquired the maker of a small but popular app. The goal is to preserve the app maker’s innovative employee processes so that the new company can enjoy access to new markets. However, the employees will eventually need to adopt new HR practices without feeling pressured. What is post-merger integration like in this scenario? The smoothest solution is to agree on a gradual phase-in plan that makes the employees at the app maker feel valued in their current roles but also emphasizes that they are part of a new organization. 

Holding a large conference to broadly explain new policies, including expected staff additions or transitions, is a great way to introduce the concepts to the wider company without stressing anyone out. Team members should make themselves available for smaller one-on-one conferences with employees who have any additional questions on a rolling basis. The best policy is to be friendly, open, and informed. 

In a cost-reduction-based PMI, however, the more quickly that cross-company redundancies can be eliminated, the better. What is post-merger integration going to look like here? Simply put, you and your team need to take a more aggressive approach. Once the agreed-upon staff reductions or re-assignments are ready, schedule meetings in as tight a timeframe as you can. While no one enjoys the layoff process, clear and rapid communication will make the process as painless as possible. Delaying the meetings will introduce feelings of anxiety and confusion within the larger company. If an entire department is being eliminated, it’s best to schedule a large conference to make the initial announcement and then conduct exit interviews with each employee afterwards. 

However, haste can make waste; while speed is crucial in reducing expenses in this type of PMI, never schedule a meeting with a staff member until you are fully versed on their position and exit options. Employees can adapt to being laid off or reassigned during the post acquisition process if they are treated with respect. Employees who are laid off without a clear explanation of the resources available to them will harbor resentment and potentially cause more problems for the company later on. What is post-merger integration if not an opportunity to create the best possible team moving forward?

What is Post-Merger Integration’s Most Crucial Asset?

The degree to which a successful PMI hinges on thorough and sustained communication may be surprising. A company thrives when each member is in step with the organization’s larger goals. The more employees are made to feel that they are an important part of the post-merger integration, the likelier the process is to succeed. 

If you’re seeking helpful hints about how to improve your communication while hitting your PMI goals, Intoo’s outplacement solution can provide customized assistance to meet your company’s needs. 

INTOO Staff Writer

INTOO staff writers come from diverse backgrounds and have extensive experience writing about topics that matter to the HR and business communities, including outplacement, layoffs, career development, internal mobility, candidate experience, succession planning, talent acquisition, and more.

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