The Growth Channel

Where most organizations go wrong with post-merger integration

by Thomas Cassels

With many markets around the country consolidating, we’ve been having extensive discussions with our members about M&A. Most of you understand that post-merger integration is crucial to success. And those of you who have been through the process before have shared some pretty interesting lessons with us. 

You’ve told us how to succeed—but just as importantly, you’ve also told us what NOT to do. Here are some of the most common pitfalls we see.


1. Beginning integration planning too late

A strong focus on the close of the transaction, while important from a deal-making perspective, can actually be a stumbling block. The complexities of target evaluation and deal negotiation easily distract from the importance of integration planning, which should ideally begin at the target evaluation stage.

Getting started this early means that the deal-making team and integration team cannot be one and the same. The transaction process generally requires a full-time commitment. To ensure sufficient focus on the integration planning process, organizations will need to pull together a dedicated integration team.




2. Starting with the biggest challenges

This may seem counterintuitive, since the most challenging tasks can often be the most fruitful ones. However, beginning with a particularly difficult objective (even one with significant payoff in the long term), can place a considerable damper on morale. When employees perceive that initial plans are moving slowly, all integration efforts tend to lose momentum.

A good example of this is IT. Due to its cross-functional nature, IT integration yields significant benefits across a wide range of other areas such as finance and care coordination efforts. However, complete IT integration is also among the most difficult of all possible integration objectives. Rather than trying to go too far, too fast, the top performers focus first on integrating basic functionalities such as email, and save more challenging objectives for further down the line.



3. Relying on vague measures of success

Few organizations proceed with a deal without outlining specific objectives and goals. Many institutions, however, fail to quantity these goals in a way that makes them measurable and trackable over time. The importance of evaluating progress against these measures, while significant at the beginning of the integration process, only increases as time progresses and the majority of the organization shifts back to business as usual. 

Best-in-class organizations not only pinpoint specific measures, but also identify dedicated scorekeepers to instill accountability and ensure performance continues to be tracked over time.


More on Mergers and Acquisitions

To learn more about the Advisory’s Boards resources to support hospital mergers and acquisitions, read our research briefing, Best-in-Class Integration of Newly Acquired Entities.

Then, check out our full suite of M&A resources at advisory.com/corporatestrategy.

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Thomas CasselsTom Cassels directs strategy and best practice research for hospital and health system executives across the nation on topics ranging from hospital finance to strategic planning and clinical service innovation.

See all of Tom's blog posts.