The document discusses key considerations for post-merger integration (PMI) of an acquired company. It identifies several challenges, including managing stakeholders' expectations, developing an integration plan, addressing technical and cultural integration, and maintaining client satisfaction. The document recommends treating PMI as a structured project, engaging stakeholders, analyzing cultural differences, integrating technologies, educating clients, and learning from past acquisitions. Addressing these areas is important for the overall success of an acquisition.

1. S. D. Isenstein MBA
PMI – An Approach
Page 1 of 16
Post Merger Integration
An Approach
The Integration Of An Acquired Company:
Managing The Process
By Scott D. Isenstein
MBA (Tech. Management)

2. S. D. Isenstein MBA
PMI Generic
Page 2 of 16
EXECUTIVE SUMMARY
As is common many organisations look to acquire companies to grow their business and enter new markets.
The accompanying due-diligence phase typically focuses on the legal and financial elements, rarely
considering post-merger integration (PMI) elements fully:
o Stakeholders
There are a number of stakeholders to consider during the PMI process, each with views and
concerns requiring consideration.
o Integration Planning
PMI is often not considered as a project, yet there are many overlapping elements. Failure to engage
with an overall plan will result in problems typical within projects (i.e. poor delivery, wasted
resources, lost synergies etc.).
o Technology
Whilst parties may come from similar sectors, the technology employed may differ. Problems occur
due to a lack of transparency, inaccurate setting of pre-sales expectation, and resource issues.
o Soft PMI Elements
Rarely formalised, culture pervades throughout an organisation as a set of values and beliefs. There
is often little structured cultural analysis pre-deal, with problems becoming apparent only during PMI.
People integration needs to dispel the perception of a ‘2
nd
class’ status of new team members.
o Client Engagement
Maintaining quality levels are key to retaining and strengthening the client base. Failure to consider
each customer’s success criteria and manage their expectations can be damaging.
The report provides recommendations that, it is believed, will aid future acquisitions including:
o The corporate vision and strategy should be sold to new members, not imposed.
o The PMI process should be undertaken as a structured project, with a recognised methodology.
o Stakeholders should be engaged formally at the appropriate time.
o Gaps in culture must be understood and an approach to manage differences developed.
o Acquisitions should be brought into the corporate framework wherever practicable and with some
urgency.
o Technology (systems / process) gap analysis should be standard and included early in the
integration plan.
o Educate clients on the product roadmap, processes, and functionality. Do not sell functionality until
proven.
o Communicate regularly (internally / externally) to ensure expectations are clearly linked to reality.
o ‘Lessons learned’ should be an integral part of the project to ensure future acquisitions benefit.

3. S. D. Isenstein MBA
PMI Generic
Page 3 of 16
CONTENTS
1 AIMS AND OBJECTIVES ........................................................................................................................ 4
1.1 REPORT AIM....................................................................................................................................... 4
1.2 REPORT OBJECTIVES.......................................................................................................................... 4
2 BACKGROUND........................................................................................................................................ 5
2.1 FINANCIAL INDUSTRY M&A.................................................................................................................. 5
2.2 SCOPE ............................................................................................................................................... 5
2.3 WHY CONSIDER PMI? ........................................................................................................................ 6
2.4 REPORT AUDIENCE............................................................................................................................. 7
3 NATURE OF THE PROBLEM.................................................................................................................. 8
3.1 STAKEHOLDERS.................................................................................................................................. 8
3.2 INTEGRATION PLAN............................................................................................................................. 9
3.3 TECHNOLOGY................................................................................................................................... 10
3.3.1 Technical Capability................................................................................................................... 10
3.3.2 Technical Processes.................................................................................................................. 10
3.3.3 Systems Integration ................................................................................................................... 11
3.3.4 3
rd
Party Agreements ................................................................................................................. 11
3.4 SOFT ELEMENTS OF PMI .................................................................................................................. 11
3.4.1 Culture........................................................................................................................................ 11
3.4.2 The People................................................................................................................................. 12
3.5 CLIENT IMPACT................................................................................................................................. 12
4 CONCLUSION........................................................................................................................................ 13
4.1 STAKEHOLDERS................................................................................................................................ 13
4.2 INTEGRATION PLAN........................................................................................................................... 14
4.3 TECHNOLOGY................................................................................................................................... 14
4.4 SOFT ELEMENTS OF PMI .................................................................................................................. 15
4.5 CLIENT IMPACT................................................................................................................................. 15
4.6 FINAL COMMENT............................................................................................................................... 15
5 REFERENCES........................................................................................................................................ 16

4. S. D. Isenstein MBA
PMI Generic
Page 4 of 16
1 Aims and Objectives
Acquisitions are a common strategy as organisations attempt to extend their influence within their traditional
markets and outside. Beyond the due-diligence phase are the requirements post-merger, which are often not
considered but ultimately play a key role in the acquisition’s success. Whilst not necessary to fully integrate a
company at every level there needs to be an understanding of the key factors in order that the correct
assessment can be made. The project focus aimed to provide any organisation faced with the integration of
a new acquisition with a framework.
1.1 Report Aim
To develop a framework to support the integration of newly acquired companies, which can be extended to
provide a structured approach for other organisations through the identification of common practical themes.
The focus will be on management of technology and the supporting elements.
1.2 Report Objectives
The report will have achieved its purpose if organisations have a framework to approach the post-acquisition
process in a structured and responsive way.
To ensure value beyond any one organisation or sector, recommendations need to be considered from a
generic perspective, regardless of industry or location.
The objectives were approached with the following outcomes in mind:
o For the stakeholder organisation
To raise awareness among key stakeholders of factors to consider post-acquisition, and the
implications of ignoring them. The focus areas were identified under the following group headings:
o. Stakeholder engagement.
o. Integration planning.
o. Technology.
o. Cultural / people integration.
o. Client impact.
There is a requirement to provide a series of recommendations to enable organisations to address
those areas adequately.
o For technology management
o. Major factors to be considered in the integration of a technology focused company.
o. Understanding key issues when undertaking technology company acquisitions.
o. Recommendations on standardising technology management across an organisation.

5. S. D. Isenstein MBA
PMI Generic
Page 5 of 16
2 Background
The identification of a suitable acquisition, through to final purchase, is a well-trodden path for many
companies regardless of sector, with the value of global takeovers in 2006 estimated at $3.6 trillion
(Thompson Financial (2007, pp.16)).
Typically the due-diligence process focuses on those components that can be easily measured, particularly
the financial and legal aspects, and the high-level synergy benefits. Integration concerns should be
considered pre-deal but often they receive limited attention, partly due to limited transparency but also to a
lack of a structured approach.
The result is that the post-merger integration (PMI) process usually begins after the deal has been
completed, and the problems encountered can threaten the overall success of the merger / acquisition. Not
being considered in advance creates severe time pressure and erratic delivery with more than two-thirds of
transactions failing at the execution stage (Adolph et al., (2006)).
2.1 Financial Industry M&A
The financial industry has been an advocate of the M&A route to growth, fuelling an internal and international
process of consolidation within banks and service suppliers. Their aim is often to gain market entry, leverage
synergies, remove competition or reliance on its domestic market, or increase competitiveness. Examples
include
o Royal Bank of Scotland and Natwest into the RBS Group.
o Bank of America purchase of MBNA.
o Merger of Halifax and Bank of Scotland into HBoS.
Card processors have been similarly involved in acquisitions with, for example:
o First Data Corporation acquiring Prepay Technologies.
o TSYS purchasing of Clarity inc. and Card Tech Ltd.
This process has been fuelled by general market deregulation and removal of the protection afforded local
providers. Additionally many entrepreneurial-based companies aim to be acquired as part of their overall
strategy.
2.2 Scope
Based on the high-level problem statement:
‘Managing the Integration of a Newly Acquired Company’
The terms of reference were to:
o Establish the key factors associated with PMI.
o Identify the appropriate time to engage stakeholders.
o Develop a generic framework to support the PMI process, containing a series of recommendations.
o Evaluate current external research to identify relevance to real-world PMI issues.
o Engage personnel to consider the importance of PMI as a topic.
o Recommend further steps post-project to develop key learning.
The following was excluded from the project remit:
o The pre-sale due diligence process.
o Commenting on specific acquisition pre-deal decisions.
o Reference to the role of individuals / groups both pre and post-deal.

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PMI Generic
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2.3 Why Consider PMI?
Having an acquisition strategy requires recognition of the importance of tasks to be addressed post-
purchase. Awareness of the requirements, the critical timelines, the stakeholders and the approaches to
successful integration will have a direct bearing on the overall success of an acquisition. This is the essence
of PMI. The effect of not addressing these areas is far reaching and includes:
o Shareholder dissatisfaction and poor return on investment.
o Damage to reputation.
o Market loss and lost opportunity.
o Loss of entrepreneurial spirit and competitiveness.
o Limited leverage of expected synergies and economies of scale.
o Client dissatisfaction and defection.
o Staff dissatisfaction and loss.

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PMI Generic
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2.4 Report Audience
Undertaking an effective PMI requires an awareness throughout an organisation of the issues and available
approaches. It should not be limited to those tasked with the delivery only. The intended audience is
therefore:
o Management with responsibility for PMI resource sign-off, sales and client management.
o Those tasked with managing and implementing the PMI process.
o Those engaged with the due-diligence process, in order to recognise the link to PMI.
o Interested parties who wish to consider the subject of PMI.

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PMI – An Approach
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3 Nature of the Problem
It can take a number of years to integrate a company to the desired level. Whilst the due diligence process
may have reviewed capabilities, there is often limited transparency until deal completion. Reasons vary but
include:
o Focus on selling the company and painting an overly positive picture.
o Reticence of acquired management to provide complete access.
o Pressure on parent to fill capability gap, clouds judgement.
o Language or cultural differences produce misinterpretation of capability.
PMI teams can therefore struggle during integration, resulting in wasted resources, incorrect assumptions,
negative politics and an inability to realise expected synergies. The key elements will be considered below.
3.1 Stakeholders
There are a number of stakeholders to consider during the PMI process, each with valid views and concerns
requiring consideration. Figure 2 identifies the relevant parties for a financial sector acquisition, although this
can be extended to other industries.

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PMI Generic
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Acquisition
Stakeholders
Human Resources
Parent Board
Senior Management - ParentSenior Management -
Acquisition
Team Members - Acquired
Team Members - Parent
Shareholders - Parent
Government Regulators Card Schemes
Functional Units i.e. technology / training
Clients
Suppliers
Shareholders - Acquisition
External Consultants
Parent Due Diligence Team
Community - AcquisitionCommunity - Parent
Expectations: Corporate Integrity,
Business Understanding, Value for
Money, Cutting Edge Technology
Expectations: Contract Adherence,
Prompt Payment
Expectations: Compliance,
Security, Corporate Integrity
Expectations: Tax, Legal
Adherence
Expectations: Security,
Benefits, Loyalty,
Advancement.
Expectations: Employment,
Support
Expectations: Employment,
Support
Expectations: Return on
Investment, Corporate
Integrity
Expectations: Return on
Investment, Corporate
Integrity
Expectations: Return on
Investment, Corporate
Integrity
Competitors
Expectations: Corporate
Integrity, Fair Competition
Expectations:
Functionality, Support,
Integrity, Strategy.
Expectations: Support,
Integrity, Structure, Security,
Parent Interface.
Expectations: Direction,
Communication, Integration
Strategy.
Expectations:
Documentation, Support,
Integrity, Openness.
Expectations: Documentation,
Support, Integrity, Openness,
Strategy, Ownership,
Knowledge Transfer.
Expectations: Contract
Adherence, Prompt
Payment, Openness.
Expectations:
Functionality, Support,
Integrity.
Figure 2: Stakeholder Analysis
It is common to have primary stakeholders who perceive their requirements as being of more importance
than others, and problems occur by allowing them to inappropriately dominate the decision making process.
The challenge as noted by Aberg and Sias (2004) is ‘to simultaneously balance the requirements of
disparate interest groups’ and failure to do so results in problems including stakeholder alienation, resource
issues, and poor impact analysis. The result is a flawed integration delivery.
3.2 Integration Plan
The process of PMI is often not considered as a project, yet there are many overlapping elements. Problems
encountered during the PMI stage mirror those of general projects:
o Limited planning.
o Lack of urgency.
o Poor overall and specific task ownership.
o Unstructured management of timelines, milestones and critical path.

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PMI Generic
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Smith and Reinertsen (1991) recognised, in general, that full understanding of requirements is unlikely and
the fuzziness consumes considerable time and resources but potentially results in little delivery. This is no
different in an acquisition where a chaotic integration leads to negative client impact, synergy loss and
resource waste.
There needs to be a sense of urgency around PMI, with a Bert et al. (2003, pp.42-49) study concluding that
eighty-five percent of all merger synergies were realised in the first year. By the end of the second year they
felt that the opportunity had largely evaporated. Whilst the key opportunities exist during the first two years,
other studies rightly suggest that there is not such a definitive cut-off point. There are still additional benefits
to be realised beyond the second year (i.e. increased understanding of partners, strengths and weaknesses
of management, economies of scale etc.), referred to as ‘second-wave’ efforts by Hoffman and Feibelman
(2003).
3.3 Technology
The majority of organisations today are driven by technology and finding solutions to the associated
problems are fundamental to PMI success.
3.3.1 Technical Capability
Whilst parties may come from similar sectors, the technology employed may differ and problems occur due
to an ongoing lack of transparency, inaccurate setting of pre-sales expectation, and a lack of extra
resources.
Additionally it is important to quickly build relationships, however if key communications are undertaken
informally there is a risk to the overall knowledge transfer process. This may be further complicated if
companies are from different locations, even with a common business language, as accuracy may be lost.
Witney and Boss (2004) noted when a deal is announced there is a flood of business requests to gain
access to systems and networks, despite the fact IT has often been engaged late. Aside from requiring
evaluation time, the PMI team may be inexperienced in the target technology. They are, however, expected
to deliver a seamless integration and can be viewed negatively if they are unable to.
3.3.2 Technical Processes
Failure to fully evaluate and provide timely solutions at the operational level increases the risk of failure,
whether through loss of synergies or even total collapse of the integration. There are a number of processes
needed to ensure daily workload is robustly handled:
o Issue Management
All systems have problems during normal operations. Failure to evaluate and deliver during PMI in
areas such as approach, responsibility, and communication, can result in under-performance.
Differences in support models can prove significant if, for example, the acquisition has a background
in providing license-based solutions without out of hours support, which may now be essential in the
new environment. Problems will therefore arise around resource availability and service levels.
o Compliance
All clients expect regulatory compliance. Scheme mandates are provided detailing regional-specific
changes and the deployment timeframe, with failure to comply incurring penalties.
o Disaster Recovery
The ability to continue without significant disruption soon after a ‘disaster’ is critical to most
businesses. Without sufficient procedures there could be significant outages. Digby (2005) noted
during the PMI of one travel company that a recovery timeline would have effectively put it out of
business, although superficially they had a robust plan.
o Development
Entrepreneurial companies can have a limited focus on standards (i.e. coding and documentation).
Often processes have not evolved to survive the pressures post-acquisition, and the result is a
chaotic environment with little control or quality. This is particularly noticeable in companies that
began as small enterprises (i.e. internet start-ups) where the drive was to innovate continuously.
Structure was not a priority.

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PMI Generic
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o Release Management
Code migration from development through test to production needs close management to ensure
quality and stakeholder consideration. Newly acquired companies may have limited structure around
these areas as historically their output did not require it. The management of this aspect was not a
priority.
3.3.3 Systems Integration
A number of systems exist to support the company including email, intranet and management (i.e. issue and
project) tools. Unsuccessful integration limits the acquisition’s effectiveness both tangibly (i.e. through direct
communication) and intangibly (i.e. sense of belonging), with potentially increased costs of maintaining
disparate systems.
Integration may not be a short-term goal, due to compatibility and security issues. Failure to implement in a
timely manner is problematic, however, fuelling staff insecurity and making communication an ordeal. Bert et
al. (2003, pp.42-49) noted that companies who are unable to integrate within a two year timeframe incur ‘a
distinct, quantifiable loss’ of potential synergies and shareholder value.
3.3.4 3rd
Party Agreements
It is common for companies to have supplier agreements. Whilst dependencies may be minor some are vital
(i.e. disaster recovery provision) and can incur significant liabilities. Problems arise in the following areas:
o Identifying 3
rd
parties and their role.
o Contractual agreements (including exit clauses).
o Reliability and trustworthiness benchmarked against parents criteria.
o Conflicts of interest in new relationship.
Digby (2005) noted a common problem where ‘mission-critical’ applications have been built by individuals
who subsequently leave. They continue to provide support independently, without any official contract or
cover.
During due-diligence the situation can be difficult, and post-deal is often the first time this can be addressed.
Key parts of the business may be compromised or tied into unsatisfactory relationships, including services
being provided by corporate rivals.
3.4 Soft Elements of PMI
Intangible factors are not easily manipulated or quantified. They are nevertheless critical to bringing
organisations together. Failure to deal with softer aspects of PMI ensures problems such as the following:
o Potential loss of synergies.
o Re-orientation and socialisation costs escalate.
o Poor understanding of stakeholder values and approach.
o Alienation of key staff.
Two key areas to consider are culture and people.
3.4.1 Culture
Wieck (1985) defined culture as:
‘Culture consists of person’s theory of what his fellows know, believe, and mean, a theory of what code they
are following. …’.
Rarely formalised, culture pervades throughout an organisation as a set of values and beliefs. There is often
little structured cultural analysis pre-deal, with problems becoming apparent only during PMI. Additionally
several cultures may exist within an organisation (i.e. sales and operations), each with their own value sets.
A cultural conflict should not be underestimated. Bert et al. (2003, pp.42-49) noted that Deutsche Telecom’s
joint venture with France Telecom and Italy Telecom collapsed when it purchased VoiceStream (U.S.).
Critics argued the inability to bridge the cultural divide caused the failure.
Each element may have an effect that is difficult for an outsider to understand. Attempts to replace or ignore
these can adversely alter a company’s approach to key areas (i.e. client management), with a failure to

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PMI Generic
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recognise and respond appropriately causing issues. Hilderbrandt et al.(1991, p.6) also noted that a culture
that is easily manipulated may remain in an agreeable status (for management) for a short time before being
replaced by another less suitable.
International acquisitions add more complexity, as shown by Gill (1999, pp.16) who noted there were
significant differences in approaches to doing business, i.e. U.S. focus on contractual arrangements whereas
the Far East concentrate on relationship building based on trust and respect. Groups may not understand
the others approach sufficiently to progress appropriately.
3.4.2 The People
Most contact during the due diligence phase would have been with stakeholders focused on the sale.
Problems occur in staff integration, however, as they also have expectations of the acquisition. Failure to
manage those could result in:
o A communication void filled by rumour or negative spin.
o Structural deficiencies being exposed.
o Roles and responsibilities being confused.
o 2
nd
class status (i.e. in benefits), whether real or perceived.
o Focus on job protection rather than business growth.
o Knowledge loss as staff leave.
Whilst initially the staff may accept limited change, this will be short-lived if progress is not as expected.
Failure to manage this will adversely impact elements key to performance, such as levels of quality and
morale. De Vita (2007, pp.38) defined ‘Employee Engagement’ as ‘the extent to which employees put
discretionary effort into their work, beyond the required minimum to get the job done..’. The Hawthorne
Studies (Mayo, 1933) had also previously recognised that individuals should not be treated purely as
resources but need to be considered as people, with differing needs and motivations. If the discretionary
effort is not forthcoming during PMI, then underperformance is likely at a time when there is pressure to go
beyond the normal effort.
3.5 Client Impact
Dependent on the relationship, clients may approach the PMI period in various ways, ranging from being
supportive through to being confrontational. Maintaining the quality levels are key to retaining and
strengthening the client base, and failure to consider each customer’s success criteria can be damaging. A
number of areas have been noted as problematic:
o Constant service disruption.
o Communication on integration problems.
o Acquirer’s clients expecting processes / structures brought in-line immediately.
o Acquired clients expecting problems to be addressed immediately or processes to be unchanged.
o Management of roadmap and sales reflecting new demands.
Aberg et al. (2004) noted that it is common to lose up to eight percent of the acquired customer base in a
rapid integration and, whilst the percentage is arguable, it is likely customers will not tolerate a degradation of
service if a perceived better alternative exists.
Organisations often struggle to take client feedback constructively, becoming defensive in their response. If
clients perceive issues are not being addressed it is inevitable that conflict will occur.

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PMI Generic
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4 Conclusion
The problems that were encountered when attempting to integrate the newly acquired companies are often
significant. The seriousness of many of the issues certainly impacted on the ability to realise expected
synergies and break into new markets as planned.
This section will provide generic recommendations to mitigate those in a way relevant to a wider audience.
4.1 Stakeholders
Analysis often clearly indicates a failure to engage critical stakeholders at the required time and level. Those
who have a key role in the PMI process are often brought in late, allowing little opportunity to plan and
resource for the task. Figure 7 identifies the ideal time for engagement against the actual engagement.
Timeline of Acquisition
Initial Discussions Purchase
Negotiation & Due Diligence Sales
Time = 0 Time = x Time = x + 1 Year Time = x + ?
Current
Integration
Timeline
Required
Integration
Timeline
Key
Current Start
Current End
Required Start Required End
Figure 7: Engagement Timeline
It was recognised that senior management engaged well with peers, however subordinate levels struggled.
Suspicion around motives led to strained peer relationships and poor communication at both the formal and,
equally importantly, informal levels.
Recommendations
o Stakeholders should be engaged at the appropriate time. The key point should be identified during
the early stages of due diligence to ensure teams are prepared. Integration to the required level
should ideally be complete within one year.
o The corporate vision and strategy needs to be sold to new members. It cannot be imposed without
resistance and negative impact.
o Negative politics often adversely affect the engagement process. Senior management sponsorship is
required to focus on the overall business need rather than those of manipulative stakeholders.
o The due-diligence team should include members of all critical functional areas. If expertise is lacking
outside consultants may be required so it is important to understand whether the organisation is
equipped for a particular acquisition.
o Engagement throughout the organisation is vital and will need encouragement and nurturing from
management. Whilst formal interaction (i.e. workshops etc.) will have value, informal ones often
provide the greatest return, so the importance of social events, secondments and team-building
programmes should not be underestimated.

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PMI Generic
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4.2 Integration Plan
Analysis confirmed the elements to be considered during PMI. Failure to identify and manage the necessary
tasks led to wasted resources and inability to leverage expected synergies.
Problems have occurred as attempts to integrate stalled that can be attributed to lack of overall planning,
communication, ownership, prioritisation, and inability to estimate timelines and requirements accurately.
Success has been limited to individual groups driving through integration.
Recommendations
o An owner must be assigned with responsibility for overall delivery of the integration, additionally
providing the necessary sense of urgency.
o The owner should have sufficient authority, and necessary impartiality, to ensure required tasks are
delivered as expected.
o The PMI process should be run as a project, with a defined remit, milestones, task owners, timelines,
structured communication etc. that would be expected. The tasks must be sufficiently assessed to
allow increased resource requirements to be considered.
o Prioritisation forums should exist to enable senior management to rule on key issues.
o The project plan should be prepared in advance, with a clear understanding of the expected level of
integration required. Whilst initially high-level there should be opportunity to add further detail as the
project progresses.
o Those who have PMI responsibilities should be clearly identified and formerly engaged.
o Stakeholders should have the ability to raise concerns with any unnecessary obstruction being dealt
with quickly.
o ‘Lessons learned’ communication should be an integral part of the project to ensure future
acquisitions benefit.
4.3 Technology
The understanding of the relevant systems and processes can be limited, hampering efforts to integrate
them into the parent. Reasons included limited transparency of the purchased technology, stakeholder
resistance, and a general reticence of the acquired staff to divulge their knowledge.
Many systems also lack the robust architecture and support processes expected and described during the
due-diligence. Whilst there is evidence that many of the correct questions were asked, the answers often
lacked detail to allow an informed conclusion. Significant resources are required to understand the systems
and processes and make them fully compliant.
Recommendations
o Technical experts should be engaged during the due-diligence phase to get a clear systems
understanding (i.e. scalability, redundancy) and the processes (i.e. issue management, business
continuity). If the expertise does not exist internally then it should be sought externally.
o A plan to address any gaps should be included within the overall integration plan and dealt with as
part of PMI. This should include fully documenting (provable) systems architecture and functionality.
The parent may benefit from adopting the acquisitions processes or technology, so should not be
readily discounted.
o It is not necessary to force systems and process integration from the beginning. If proven to be
adequate the situation could remain at least for the short-term. Strain and resentment during the
initial PMI period would be alleviated with this approach, providing the cost of maintaining separate
systems is not prohibitive.
o Metrics should be tailored for the acquisition, particularly if the business differs from that of the
parent (i.e. licensing v processing). Additionally there needs to be recognition of the impact
integration will have on the ability to meet targets and be readjusted realistically.
o Knowledge transfer and training should be a priority, as there will be inevitable departures of key
personnel.

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PMI Generic
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4.4 Soft Elements of PMI
Understanding the cultural differences between the parties, and managing the expectations of the individuals
involved, is complex. The impact of instigating changes or ignoring a key factor cannot be underestimated,
as even the smallest alteration can result in disharmony.
Recommendations
o The gaps in culture must be understood and an approach put in place to manage differences.
Outside expertise is usually required to ensure impartiality.
o Communication must be two-way to reduce the perception that acquired team members are not
being considered. Failure to listen and act will cause a performance dip during the PMI, when there
is a need for high performance.
o Alignment of benefits may be difficult, due to factors such as cost of living and regional laws. Every
effort should be made to bring the acquisitions into the corporate framework. If this is not possible
clear communication, not just to senior management, should be undertaken. Ignoring or delaying
allows damaging rumours to begin.
o Acquired senior management need to clearly understand their role. This should include managing
pro-actively the soft elements of PMI and be company advocates. If they are unwilling to undertake
this, their continuing employment should be carefully considered.
o Creative tension between groups should be constructively managed, as it may provide positive
results. Conflict, however, should be dealt with proactively, quickly and transparently.
4.5 Client Impact
Clients may not react to an acquisition in the same way or hope for the same outcomes. What is likely,
however, is that there will be some impact to be managed. Ensuring clients are comfortable with the strategy
is key to retaining and expanding the business.
Recommendations
o Be realistic on client impact and plan to mitigate those.
o Communicate regularly to ensure expectations and problems are managed, which will limit the
senior management escalation prevalent during the integration period. Total integration is unrealistic
in the short-term and should not be an early expectation.
o Educate clients on the product roadmap, processes, functionality and potential routes to market. Do
not sell those areas until proven.
o Scorecards can provide a high-level snapshot of client confidence. They should be used objectively,
considering the PMI difficulties encountered realistically.
4.6 Final Comment
A number of generic recommendations have been provided, and it is believed will aid the PMI process for
future acquisitions. This report has detailed the key variables involved and has identified the areas for
consideration that are often ignored.
Although outside the remit of this report, two associated areas are worthy of detailed review:
o The due-diligence process, with the aim of reducing pressure on those tasked with PMI delivery.
Suitable stakeholder engagement, identifying key questions and the ability to obtain verifiable
answers are vital.
o Undertaking an acquisition requires specialist skills throughout the organisation that are not part of
the usual skill-set. If the model for growth through acquisition is required, consideration needs to be
given to defining the required expertise and ensuring it is available.

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5 References
Aberg, L., Sias, D. (2004) ‘Taming the postmerger IT integration’, Mckinsey & Company, New Jersey.
Adolph, G., Elrod, K., Neely, J. (2006) ‘Nine Steps to Prevent Merger Failure’, Harvard Business School,
Massachusetts.
Bert, A., MacDonald, T., Herd, T. (2003) ‘Two merger integration imperatives: urgency and execution’,
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