The Art of Capital Restructuring: Creating Shareholder Value through Mergers and Acquisitions

CHAPTER 16

Postacquisition Planning and Integration

OLIMPIA MEGLIO

Assistant Professor of Management, University of Sannio

ARTURO CAPASSO

Professor of Management and Corporate Finance, University of Sannio

INTRODUCTION

This chapter analyzes the postacquisition process. It focuses on the planning and implementation of the integration process, highlights their contribution to value creation, and identifies potential pitfalls. Jemison and Sitkin (1986) propose that an acquisition should be seen as a process. Describing the acquisition as a process means that it does not end with the closing of the deal but that it can last several years. Recognizing a process view of mergers and acquisitions (M&As) implies that the integration should start during the negotiation phase of the deal. A careful analysis of the time and costs of integrating the merging companies may modify how parties evaluate the deal.

The integration process is the process through which the acquiring company organizes the interaction with the target company and implements changes to exploit the expected synergies and forecasted cash flows. Haspeslagh and Jemison (1991, p.106) define the integration as an “interactive and gradual process in which individuals from two organizations learn to work together and cooperate in the transfer of strategic capabilities.” Such a process is necessary, as the existence of a strategic, organizational, or cultural fit does not in itself assure that management will successfully exploit ...