Many large companies today have reached their size and scale via numerous acquisitions along the way. They integrate these acquisitions along three dimensions – financial, legal and operational. Financial and legal integration are of course mandatory dimensions to completing a deal, but the degree of operational integration can vary widely. Trouble is, this is where the value of the deal is either unlocked or destroyed.

In relative terms, operational integration is easiest to pull off at the time of deal close. The synergies are clear and top of mind, there is a sense of urgency in the acquirer, and the acquired company is most likely to cooperate. 

You can guess what happens to these subsequent waves of operational integration: they become a lower priority and never really seem to happen. And in a strange twist, the unfortunate result of the merger may be more inefficiency rather than less.

Take, for example, what happens in staff functions like finance, accounting, and purchasing. These are usually the first to be centralized or moved to shared-services, and then the integration team will check off this operational integration task and assume it is done.

But, several months down the road, things start to unravel.  Staff functional leaders might notice that multiple divisions are paying multiple prices, with multiple discounts and trade arrangements for the same items from the same vendors.  The functional leaders may then attempt to lead and drive efforts to get the operating divisions to change their purchasing behaviors and practices. But at this point, the acquisition has receded so far into the past that operating divisions have developed their own autonomy. As such, they’ll often either refuse to cooperate or provide only limited support for such efforts.

In today’s challenging business environment, companies cannot afford to overlook the potential operating improvements and cost reduction opportunities that may be locked up inside their post-merger organizations. 

So what can you do?  Dial up a re-run. 

From our perspective, the best way to unlock these opportunities is to completely re-apply the post merger integration methodology.  Sure, the original deal has long since passed. So most companies would approach this additional operating integration in an incremental, traditional approach to cost reduction.  But that may not be nearly as effective.

Instead, you can actually plan for two waves of operational integration, and after the initial wave has passed, dust off your playbook for reuse. 

We recommend the following 5 Steps for Post-Post Merger Integration:

1. Establish a “post-post merger deal team” consisting of executives across divisions and across functions, whose participation is necessary to overcome established practices and behaviors.

2. Establish a new synergy case using rigorous analytics to assess disparate data sets across divisional lines to establish a clear fact base for making the changes.

3. Set aggressive deadlines for “deal close” to re-establish a strong sense of urgency and to force prioritization and concentrated resource focus.

4. Re-apply a post merger (PMI) methodology to provide a framework, structure, process for completing the effort.

5. Link executive compensation and succession planning (and, if necessary, exit packages) to the successful completion of the effort.

By applying the typically transaction-focused PMI methodology in an operating setting, companies can dial up the significant operating improvement and cost savings that are so sorely needed today.

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