Framework for Post Merger Integration using systems principles

Abstract

The objective of this paper is to present a framework for the Integration phase of Mergers and Acquisitions (M&As) based on systemic principles. Globally, we have seen consolidation is happening in many industries. In this stage, companies try to achieve growth using economies of scale. So, companies look for inorganic ways to achieve growth. M&A has been one of the key strategies for inorganic growth. Many companies invest most of their resources (Time & Money) during the due-diligence stage to negotiate the deal price and other aspects. In spite of this, we have seen that many of these M&As in recent times have been a failure. Most of these failures can be attributed to issues during Post Merger Integration (PMI) phase due to lack of synergies. It is recommended that companies should invest extra time during the PMI phase to realize the benefits of the deal. The framework suggested is based on systems principles such as holism, purposefulness, law of requisite variety etc.