Merger integration due diligence
We introduce merger integration due diligence as a new type of due diligence that arises from the objective “Maximize likelihood of integration success”.
Definition of merger integration due diligence
Merger integration due diligence has the goal to review the merger integration project and plans.
All aspects of merger integration are being reviewed for viability and for likelihood of success. Viability relates to the work breakdown structure for the integration to be consistent and complete. It also relates to resources (employees and budgets) that have to be sufficient and available. The objective of the task is to maximize the likelihood of merger integration success.
Based on the decomposition of the merger integration task we can define the corresponding decomposition of the merger integration due diligence task.
Review of the design of the new entity
The design of the new entity has to be reviewed for consistency and completeness. We start with the business strategy and plan layer and review the defined business strategy for the new entity. Then we enter the second layer and ask questions like: will the business processes work? Are the business processes compliant with compliance rules? Is governance of the business ensured?
In parallel, we have a look at the business resources and at the questions: Are enough qualified resources planned and available? Are the assignments of resources to tasks sufficient? Are sufficient resources planned and available?
Review merger integration plans
Next we review merger integration plans. Keeping in mind the design of the new entity and the resource situation, we review the schedules and the steps of the merger integration plans. We ask questions like: Can the merger integration plan be executed the way it is defined? Will sufficient resources and budgets be available at the right time to execute the merger integration plan successfully? What happens if we run late or we have resource shortages?
Review merger integration project
This is the part of the review that is often neglected in practice. We review the structure and behavior of the merger integration project.
It is important to keep in mind that the word “project” implies that we have a professional management of the integration leveraging professional project managers, experienced with complex projects and equipped with skills of a certified project manager. We should also have a project steering committee in place that has wide competencies and can drive and take decisions quickly.
We also focus on getting answers to questions like: Do we have the right assignments of resources to merger integration tasks? Are the resources capable of executing their assigned tasks? Do the resources have appropriate social competences to lead people and convince them the integration is the right thing to do?
With the results of the merger integration due diligence, you are well prepared to have the right budget, business plan and integration approach.
Find more information on merger due diligence on the website mergerduediligence.com
Title: Mergers and Acquisitions in the software industry - Foundations of due diligence
Author: Karl Michael Popp
Publisher: Books on demand
Date published: Aug 1st 2013
(c) Dr. Karl Popp 2017,2018