A successful merger, acquisition, or joint venture can open up new markets, neutralize a competitor, and improve shareholder value. Too often though, transactions fail to meet the combined company’s expectations. A deal can disappoint for any number of reasons, but by establishing clear definitions of success and a structured integration process at the outset, corporations may prevent problems. Identifying risks and measuring performance earlier in the process also fosters an atmosphere of accountability and partnership.
Deal teams should work together with a target’s management to establish organizational standards and align the proper resources with high-priority integration components, ensuring that the transaction continues its path to success. It is important to institute milestones throughout the process to ensure that strategic objectives are in check. Key performance indicators (KPIs) will enable the deal team to see the entire picture and consider the tangible results in an otherwise complex integration plan. They also provide a management tool to monitor post-transaction value creation long into the future. In addition, KPIs are quantitative in nature, which can help eliminate emotions in what can sometimes be an intense situation.
To that end, deal teams must work collaboratively to derive the KPIs, which will ensure transaction completion and integration of value-creating business components. These components can determine the link between budgets, spending, performance, and strategic objectives. Companies frequently task operations with defining KPIs, but operations are only part of the picture. Finance, IT, HR, and marketing also add value to the acquired company and should be measured accordingly. Applying a multi-disciplinary process that defines and tracks KPIs ensures that all departments play a role in integration. In doing so, deal teams encourage employee engagement and build trust across the enterprise.