FREE online courses on Mergers & Acquisitions - Chapter 6 - Measuring PMI

 

The last area we want to touch on is measurement of post merger integration (PMI). Results of the integration process need to be captured and measured so that you can identify problem areas and make corrections. For example, are we able to retain key personnel? How effective is our communication? We need answers to these types of questions if we expect success in PMI. 

 

One way of ensuring feedback is to retain the current measurement systems that are in place; especially those involved with critical areas like customer service and financial reporting. Day to day operations will need to be monitored for sudden changes in customer complaints, return merchandise, cancelled orders, production stoppages, etc. New measurements for PMI will have to be simple and easy to deploy since there is little time for formal design. For example, in one case the PMI relied on a web site log to capture critical data, identify synergy projects, and report PMI progress. On-line survey forms were used to solicit input and identify problem areas. A clean and simple approach works best.

 

A measurement system starts with a list of critical success factors (CSF) related to PMI. These CSF's will reflect the strategic outcomes associated with the merger. For example, combining two overlapping business units might represent a CSF for a merger. From these CSF's, we can develop key performance indicators. Collectively, a complete system known as the Balanced Scorecard can be used to monitor PMI. Process leaders are assigned to each perspective within the scorecard, collecting the necessary data for measurement.

 

Example 19 - Balanced Scorecard for Post Merger Integration (PMI)

 

Perspective                       Key Performance Indicator

Customers               - Retention of Existing Customers

               "                       - Efficiency in Delivering Services

Financial                 - Synergy Components Captured to Date

       "                     - Timely Financial Reporting

       "                     - Timely Cash Flow Management

Operational              - Completion of Systems Analysis

       "                     - Reassignments to all Operating Units

       "                     - Resources Allocated for Workloads

Human Resource       - Percentage of Personnel Defections

       "                     - Change Management Training

       "                     - Communication Feedbacks

Organizational          - Cultural Gaps between company's

       "                     - Number of Critical Processes Defined

       "                     - Lower level involvement in integration