What Does Post-Sale Integration Mean?
Post-sale integration is the strategy that buyers deploy after the transaction closing date to assimilate the acquired company into their operations. Post-sale integration can be gradual where the acquired company carries on with minimal change for the first 12 to 24 months. Gradual integrations are more common with financial buyers or when the acquired company operates in a different industry than the buyer or has a distinct service or brand that is worth keeping separated. More rapid post-sale integrations occur when strategic buyers wish to realize synergies and provide an immediate lift to their profitability.
Divestopedia Explains Post-Sale Integration
Post-sale integration is usually broken down by buyers into three separate stages:
- 90-Day Post-Acquisition Plan (Short-Term) — This plan has to do with mission critical-related activities to stabilize the acquisition or steps that will provide a high return on effort invested. It often includes "quick wins" to generate momentum. Mission critical activities are often administrative and include opening bank accounts, notifying suppliers and/or customers and managing employee reaction. An example of a quick win could be increasing pricing for some or all services or products if the target competed in the industry, but has consistently priced 10% below.
- Six to 12-Month Plan (Mid-Term) — This plan includes high return activities that are not urgent, but must be completed in year one. Some example activities would be the integration of employees into the buyer's pay scales and benefits, the changeover into the buyer's accounting and other data systems and the identification and potential elimination of redundancies between the acquired company and the buyer.
- Beyond 12 Months Plan (Long-Term) — This plan is more strategic and may not yield immediate results. It usually entails the consideration for new business lines that the combined entity can now access, the addition of new product lines and/or deletion of low return ones and the identification of additional bolt-on acquisitions that would increase value for the combined entity.