What You Need to Know About the "Home Base" for All Your Integration Activities
M&A Leadership Council
Establishing an IMO plan for the purposes of managing integration is highly recommended, as it provides a “home base” for all integration activities and can be set up as a unique cost center to capture integration related expenses.
At its essence, an IMO is a temporary M&A program management office that:
- Drives development of overall integration plans, including all the integration projects, communications plan, and synergy benefits
- Defines and manages your integration processes, including functional work plan reviews, cross-functional collaborations, issue management and executive status updates
- Manages stakeholder communications, including company executives, functional resource owners, and acquired company management
- Drives the pace of integration, disciplines and protocols for execution
- Tracks continuous improvements such as measuring and surveying various areas, incorporating feedback into updated integration processes and tools, etc.
Best Practices for Establishing an Effective IMO Plan
The IMO should be established at least 60 days before close to allow time for integration activity scoping, staffing and securing physical space to house integration staffers and any consulting/contracting resources that may be engaged for ancillary support. It is recommended that IMO leaders find some physical office space to house themselves at both locations (the acquiring company and acquired or merged company). This is essential because integration team members require secure work and collaboration spaces for the duration of integration.
Most IMO office locations can feel like a “war room,” with lots of white boards and wall space to post materials that are used to support integration activities. Having some dedicated IMO space allows you to collect a good deal of information which needs to remain confidential and secure. Along with keeping information safer, IMO offices can also be used for private discussions involving employee issues and other matters that need to be addressed behind closed doors. However, when not discussing a confidential matter it is a good idea to always have your “doors open,” especially when at the acquired company’s location.
Employees at acquired companies are experiencing an intense level of change, and oftentimes IMO leaders become sounding boards for issues and concerns. While you may not be able to fix or even address many of these issues, the fact that you are there and in a responsive mode helps keep employees focused on the business. Therefore it’s advisable to be accessible when on-site: be available to listen when someone comes in to discuss a matter, for instance. By doing so, many times you uncover potential issues that you or the organization is not aware of.
NOTE: while you can endeavor to have your “door open” and be available to listen, make sure the IMO office does not become the “complaint department.” Integrations create disruption and change which affects people in a variety of ways and some people feel compelled to pinpoint every inconvenience they are experiencing or share their personal thoughts on the “problems” with the new organization.
As an integration leader you must solicit constructive criticism and politely but firmly ward off the typical “noise” of complaints. Once folks realize the IMO is not a way station for complaints they will back off. Here are a few tips for addressing complaint issues:
- Always have an open door, but remind people you are soliciting feedback that can help improve workstreams or address a specific solution
- Avoid discussing personnel issues that are centered around the inability of two or more people to work well together, as these complaints are usually intended to influence personnel decisions. Personnel decisions should be made absent of any bias and undocumented information (i.e., hearsay)
- If an employee raises a personnel issue that may suggest a conduct or ethical violation, you should engage your human resource contact immediately and brief them on the issue
- Avoid discussions that are centered around an employee’s opinion of the company’s strategy, executive leadership decisions, or any other high-level issues. While these may be interesting discussions employees should be focused on day-to-day operations so as not to disrupt the business any more than it is already
- Lastly, if despite all of the practices utilized above you have an affected employee who is complaining unprofessionally, distracting others, and generally being counterproductive, address it quickly. Disgruntled employees are like a cancer in an integration because people are already sensitive. Having someone walking the halls with a bad attitude helps no one. These are typically people who are on their way out anyway and, if that is actually the case, my recommendation is to execute the separation as soon as allowed by your HR guidelines
Verifying Integration Type and Level of Support Required
IMO offices can vary, and there is no hard and fast rule for specific organizational structures, number of people, and reporting lines. The best IMO office for your integration is one that might:
- Establish a formal structure with clear roles and responsibilities
- Leverage acquiring and acquired company personnel
- Report to a C-level executive
- Have methods established to manage integration information and quick reports such as integration software, Sharepoint, Basecamp. These are examples of shared folders for transparency that executives and integration leads need
Key reporting elements can include the following:
- The IMO office may report in to C-suite (typically the COO, but this can vary)
- The IMO office may include a Division Sponsor if one part of the company is heavily involved in the integration (but this is not mandatory)
- An IMO Team Leader: this may be the executive in charge of the IMO (for whom a typical title is VP Integration Mgmt Office). In any case the IMO team leader must have extensive experience and a respected record of success
- An IMO Team Support: this may include a mix of dedicated staffers, consulting resources, and administrative support staff
- Functional Integration Team Leads: While functions included on your chart may vary, it is most common to always have HR, Legal, IT, Sales, and Operations team leads included, but this setup can vary based on the companies’ industries and the overall integration type. The most important point here is to identify which functions will serve a primary role in the integration activities and make sure they are represente
Determining Functional Resource Commitments
Functional leads are essential to a smooth integration and making sure they understand their roles and responsibilities is critical. Integrations can get bogged down unnecessarily because of breakdowns in even one department’s activities.
In setting up your IMO plan, you also need to establish clear roles for a functional resource owner (for example, the lead that reports to the CFO) so they know what to expect as well. To this end, here is a summary of key roles for each a manager of a functional resource (again, someone like a VP of Finance) as well as an integration team member.
A function manager:
- Allocates and supports assigned functional resource
- Manages escalation with functional management
- Maintains consistency of processes
Whereas, an integration team member:
- Is a single point of contact for the IMO as well as its peer functions and the acquired company
- Has their own definition and execution of the functional work plan within the organization
- Trains/coaches acquired company peers on key business processes
- Escalates integration related issues within their function
- Ensures consistency between intra-function status reporting and integration reporting
- Supports project, synergy, and communication planning and execution and individuals from integration project to integration project
Carefully assessing your staffing needs during due diligence to determine the IMO staffing model that best fits your needs is essential. No one wants to change the IMO office structure during the integration; changing structures midway is highly undesirable. Get the staffing model agreed upon and established up front to help your integration run more smoothly.
Learn more about managing your integration at our upcoming training: "The Art of M&A® for Integration Leaders: Mastering the Fundamentals / Live-Online" November 7-9, 2023.