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How to Merge Companies Successfully

Five tips for a seamless integration process.

A merger is a consensual combination where the owners/management of each business help the other, with the aim of making the deal beneficial and profitable for both. For some small manufacturing companies, a merger expands operations, cuts overhead costs and increases efficiency, competitiveness and asset utilization. Successfully leveraging the combination depends on careful planning and execution. Anders Stubkjaer, President of AS Consulting Group, offers five ways to help ensure success:

Maintain focus on running the core businesses. Identify potential disruptions and how to handle them. Until a function is integrated, its leader must be empowered to make day-to-day decisions without second-guessing from the merger partner or integration team.

Appoint a dedicated leader of the integration team who has visible and continuing support from the CEO/president. Integration teams should develop detailed plans, targets and project schedules with resource requirements and expense budgets, and determine how to track progress. Teams including members from both companies should review, validate or modify assumptions about the merger's synergies.

Make culture and people decisions early. Decide which merger partner's culture is best for the company. Determine top-level organization structures and agree on who will fill leadership jobs. Conduct a deep process analysis instead of simply combining operations. For example, consolidating smaller warehouses into larger ones will provide some savings, but a full logistics study may show that none of them are in the best locations.

Finance must weigh in and establish standardized reports, dashboards, pricing changes and costing methods. It should review the integration team's profit expectations and expand the options being considered. Finance can also provide feasibility checks on savings, time frames and forecasts.

Keep the customers happy. They may be wary of disruptions or fear broken long-term links with sales, customer service and plant personnel. Maintain customer relationships, and consider visits by company leaders and the integration teams to reassure them and explain changes that may affect them.


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