Creating an In-house Integration Management Office and Using Line of Sight (LOS) Planning
By Stefan Hofmeyer, USA Partner at Global PMI Partners

As your company embarks on a merger or acquisition, you cannot help but to think of all the failed deals in the news, and how transformational change can impact your business– and you personally. Mergers and acquisitions are inherently risky, especially related to the integration effort. Trying to determine the best course of action is not for the faint of heart.

A common post-merger integration dilemma for top executives: to insource or to outsource?

A few of your colleagues have experienced integration difficulties in the past and desire to hire a consulting firm to handle the integration, pushing the “easy button” if possible, and frankly, outsourcing some of the integration responsibility.

You know personally engaging a consulting firm does not guarantee success, and your internal team does have strong capabilities. The added cost of a consulting firm to do what you can handle in-house seems like overkill, and after all, you ultimately own the integration.

The “insource or outsource?” dilemma is not uncommon – My colleagues and I at Global PMI Partners see this all the time as integration experts. 

Below I provide a perspective of what you can do as an executive dealing with M&A integration, and specifically how to set up an internal Integration Management Office (IMO) to manage complexity. The ultimate goal is to utilize internal resources where possible, and as needed, use consultants to round out your team to address blind spots and resource gaps that may exist.

The two points I’d like for you to take away from this article are: (1) Have a governance mindset to drive clarity in your work and (2) Use line of sight (LOS) planning.

A Governance Mindset (Not a Bureaucratic Mindset)

M&A integration of a target or merged company focuses on integrating people, process, technology and data. Internal and external audiences affected by the transformation must also be managed and communicated to. Audiences include: customers, vendors, investors, regulatory agencies, and of course, employees.

Proper governance is essential for clarity of process and typically comes in the form of an Integration Management Office (IMO). The IMO directs the core functions of the integration effort and provides structure and clarity for efficient integration delivery. IMOs should be lean, with every governance related task being driven by a clear need. IMOs should increase, not decrease, efficiency.

Executive Steering Committee to IMO to Functional Teams

An IMO typically reports up into an executive steering committee and manages functional integration teams. Functional teams include Sales, Marketing, Finance, Product Development, Human Resources, and other functions that meet the needs of your business.

Functional team scope of effort varies based on the level of integration required for the acquisition. However, even in the case of an acquisition that is considered as stand-alone (no integration – the acquired company runs by itself), there are critical interface points for, at minimum, financial reporting and compliance.

Identify one person to lead your IMO and ensure that this person has a project management mindset (a person good at managing tasks with defined end dates). Preferably this person has had project management training or is PMP certified. Assign one lead owner to each functional team and identify their peer in the target organization. Most often primary functional team leads are from the acquiring organization, but not always, and can be from either organization in a merger.

Line of Sight (LOS) Planning

Now with governance in place to drive clarity of execution, let’s turn to the implementation of deal objectives.

As a consultant, I am often given a Gantt chart of integration tasks and am asked if it is complete and ready for execution. Although there are common tasks that are typical across corporate integrations, having this flat view of tasking is not enough to achieve integration goals and to establish a complete integration plan.

Deal Objectives to Functional Charters to Integration Tasks

By line of sight (LOS), we mean using deal objectives to inform integration planning. Leveraging governance within the IMO, obtain deal objectives (the deal thesis or business objectives), establish business function team charters from deal objectives, and use these charters to define integration tasks.

Incorporating both general integration tasks with tasks driven by specific deal objectives, we now have a close-to-complete integration task list. At this point the IMO can get together and review the integration tasks and integration plan in total. The integration plan, which I do not address in this article, is more than just a task list or Gantt chart. The integration plan includes sub plans such as a risk management plan, communication plan, and other plan components.

To close the loop, the IMO then can establish metrics for integration execution. These metrics include cost and revenue synergies that are typically part of deal objectives, as well as metrics driven off of milestones identified in the integration tasks.

Conclusion

An integration of two companies is complex. The goal of integration management is to simplify and clarify integration tasks as much as possible for efficient execution. This is best accomplished through governance driven by an integration management office with tasks developed through line of sight planning.