Short introduction of Dr. Thomas Forster

Dr. Thomas Forster holds a doctorate in business administration. Due to his many years of management experience both as CEO and CRO of globally operating companies in the manufacturing sector and as an independent management consultant and interim executive manager, he has a wide range of practical experience in business transformation and corporate value enhancement. His implementation-oriented approach led to significant successes in organizational, strategic and financial realignment of companies as CEO ad interim. As part of the transformation process, Dr. Forster first destroys existing structures before making room for new and better structures. He is also significantly involved in the development of these and a holistic strategy development process and its implementation. He has been SEViX Senior Executive Partner since 2017 and is one of the main authors of the reference book "Enterprise Value Enhancement - Business Transformation as an Opportunity."

In the post-merger integration process, an effective strategy must be developed and an overview maintained

Post-merger integration (PMI) is the integration of a company acquired by purchase or merger, i.e. the process by which, after a legal merger of at least two companies, their processes and structures are standardized and/or business units are combined organizationally.
Every PMI aims to achieve the acquisition objectives of the purchase, including any associated synergy and restructuring effects. The extent to which this can be achieved depends, among other things, on the approach and the degree of post-merger integration to be aimed for. It is generally not possible to make a concrete statement on an optimum degree of integration, and it depends more on strategic considerations and situational circumstances. The degree of integration essentially depends on two influencing factors: the need for "strategic interdependence" and for "organizational autonomy".
Many takeovers fail against a background of incorrect integration and synergy management. Even before the takeover transaction is completed, precautions must be taken to start the post-merger integration. Usually, a distinction is made between transition and transformation. The transition between signing and closing describes the transition phase that ends with the change of control. Transformation starts afterwards and means the system change, i.e. the long-term integration of the acquired part of the company.
Post-merger integration can be complex and take a long time.
The influencing factors here are, to name just a few of the most important, the size of the part of the company taken over, the regional spread, the growth ratio, the addition of new business areas, the management overhang and the clash of different corporate cultures.

Interview with SEViX

SEViX: What do you mean by post-merger integration (PMI)?
Forster: At SEViX, we understand PMI as the strategic and organizational integration of an acquired company into a receiving company or group. The extent of the integration can vary completely from case to case and depends on the synergy and restructuring effects expected from the transaction. However, the aim is always to increase the value of the company.
SEViX: Post-merger integration thus aims to ensure the success of the acquisition or merger. What are the determinants of success for PMI?
Forster: The most important prerequisite for a successful PMI is the use of an interdisciplinary team with functional experience and solid industry knowledge to coordinate and support all integration activities. Individual team members must bring teamwork skills, strong communication skills, mental robustness and the necessary level of empathy. Previous experience in different corporate cultures and comparable situations is very helpful here, which is why a mix of internals and externals is usually very value-adding. You really need the best possible team here, because the chance of success only comes around once.
SEViX: Reduced to the preparatory measures: "Which three factors determine a successful post-merger integration?
Forster: Ideally, you use the time from due diligence to closing as preparation and start the PMI process immediately after closing with a 100-day plan. This sets the course for a successful PMI. The most important success factors of a PMI preparation therefore include:
1. naming the right head - PMI needs leadership.
2. determine the right measures - it's all about sustainable effects.
3. determine the right process - the interaction of all levers increases the efficiency.
SEViX: During PMI, there are a number of activities to be performed under high time pressure. Can you name a few?
Forster: The basic problem is the temporary coexistence of day-to-day business and realignment, which must be communicated above all to employees and customers. This places particular demands on the employees in the integration team, both personally and in terms of time. This often becomes a Herculean task, because the following activities run in parallel:
1. the uninterrupted continuation of day-to-day operations
2. The setting of strategic priorities
3. leveraging synergy and restructuring effects, e.g. by harmonizing process flows and IT, and
4. Control of business risk in the newly emerging company.
SEViX: What are the issues at the heart of this situation and the most urgent to resolve?
Forster: From my experience, the following questions inevitably arise most urgently during the integration phase:
1. which corporate functions are to be integrated particularly quickly?
2. how quickly can synergies be realized?
3. how can a new, unified culture be created?
4. how to avoid conflicts that may arise in the process?
5. how do you succeed in retaining employees in key positions?
6. how to ensure that employees focus on the business and customers during the integration process?
SEViX: Internal and external communications play a central role in the PMI process. What is the focus of corporate communications in the environment of change?
Forster: Well-timed corporate communications are key to the success of a PMI process, because they give you the opportunity to actively inform and motivate all shareholders and stakeholders at first hand. In this respect, corporate communications has the following focal points:
Create a "positive" climate among employees, which contributes to the success of integration
Ensure regular, consistent, and as timely as possible communication with stakeholders on project and status.
empower managers to become multipliers and communicators for integration
Create understanding of the reasons for the acquisition among all relevant target groups through comprehensible statements.
SEViX: How must communication take place in PMI?
Forster: A corresponding communication strategy must be developed early and proactively even before the signing and aligned to the respective target groups with the appropriate content, staggered over time. By day one of the PMI, a communications plan should be in place with measures that are as specific as possible and tailored to the respective internal and external target groups. The internal target group primarily includes employees, the supervisory board, management, senior executives, works councils and other stakeholders. The external target group includes investors, banks, customers, suppliers, public authorities, antitrust authorities, the press, etc.
The most important communication contents are in particular the reasons for the merger, the effects on the organization and the employees as well as on their perspectives, the location policy, the personnel development, intended synergy effects, quick successes and of course also the achieved results.
SEViX: In a nutshell to conclude: How would you approach a PMI?
Forster: With an interdisciplinary PMI team of internals and externals and a 100-day plan on the day of closing.
Post-merger integration aims to ensure the success of the acquisition or merger. The chance of success comes only once! PMI should therefore be carried out by an interdisciplinary team with functional experience and solid industry knowledge. Individual team members should have teamwork skills, strong communication skills, mental robustness and the necessary level of empathy. Previous experience in different corporate cultures and comparable situations is very helpful here.
SEViX: Thank you very much for your explanations.

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