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What is a Post Merger Integration Process (PMI) ?


Merger and acquisition planning, due diligence and execution are usually carried out with as much secrecy as possible to avoid competitive poaching and to keep the price of the target company’s stock from being driven up by speculators and the acquiring company’s stock from being driven down.   The driving motive for a merger or acquisition is often the opportunity to enter a new market or to expand the market share of the acquirer.  Whether the takeover is friendly or hostile, however, synergy is often the deciding factor in a ‘go or no go’ decision.   A major justification for a merger is usually the savings that will ensue by eliminating duplication of work, two IT departments can become one, for example.  The blending of two corporate entities into one is called Post Merger Integration, PMI, which may be divided into the following

  1. Establishment of a new structure for the organization. Screening of management potential and determining new management positions

    A. Review the mission, markets and production elements of the newly created entity and develop an organization structure to meet these requirements.

    2. B. List the goals and objectives of the merger in descending order of importance:

    • Review the IT system, hardware and personnel and set a plan for integration with a cost estimate.  
      Select a CIO.
    • Harmonization of the products, reduce duplication, agree on branding
    • Inventory production capacity and identify like processes and tools (machinery) and develop a plan for elimination of duplication and integration of like practices.
    • Unite the personnel departments and charge the new entity with developing an internal line of communications to keep the employees informed of merger process and to instill a sense of individual value to the new entity.
    • Unite purchasing, inventory control and logistics
    • Unite the R&D, market research sectors
    • Review the two entities’ accounting and finance reporting systems for compatibility and ease of integration.  Settle on an outside auditor.  Select a CFO from the existing staff, if not possible recruit one as soon as possible to oversee the integration.

  2. Development of a common company culture: for example

    • Company culture analysis
    • Team development
    • Development personnel
    • Employee events
    • CI-measures
    • CD-measures

  3. Definition of milestones for the individual areas, analysis and consolidation of processes while always trying to harmonize the processes. In particular, this includes:

    4. A. Develop an integration time line of goals and objectives that takes into account the requirements of the on-going businesses and ensures that there is a minimum of loss of sales, development and production and retains the key people required to keep the merging businesses successful.
    meet these requirements.

    B. Establish a set of metrics against which the time line is measured to keep the project on track and focused.