Jilian Consultants Co., Ltd.
Jilian Consultants Co., Ltd.

Characteristics and Typical Problems of Integration Management After Overseas Mergers and Acquisitions

Overseas investment is the only way for multinational companies to "globalize", and prudently doing a good job in risk prevention is the guarantee for successful overseas investment activities. In the process of "going out", multinational enterprises are paying more and more attention to the financial/operational risk management before investment, during investment and after investment , which will lay a solid foundation for the smooth development of overseas investment activities. 

Among them, post-investment management is a relatively new concept. More and more global cases show that integration after overseas mergers & acquisitions is an important part of the success of mergers and acquisitions. In many cases of corporate mergers and acquisitions, although the foreign investment company has spent a lot of time formulating a feasible strategy that meets the company's future development needs, selected suitable targets, and paid a reasonable price, if the target company cannot be successfully integrated, then the transaction will not bring value to the business.

In the 2013 global CFO survey, it was surprising to find that more than 70% of the M&A transactions did not realize the expected value, and more than half of the M&A respondents said that it was because of the difficulties in the integration stage that the expected synergies were caused by the company. hard to accomplish.

Ⅰ. Overseas Mergers & Acquisitions companies that successfully integrate overseas projects and can fully realize synergies after the transaction share some common characteristics, including:

1. Be able to recognize the importance of overseas mergers and acquisitions integration, and it will be difficult to achieve synergies and transaction goals by "unintegrated";

2. Before signing the contract, fully consider the business model and integration strategy, and "make decisions and then act";

3. Start the integration work as soon as possible, so that the work teams of both parties can fully integrate and lay the foundation for business docking;

4. The formulation of the management and control model should be based on how to more effectively achieve business development goals, and ultimately be reflected in the design scheme of corporate governance, organizational structure and decision-making authorization system;

5. Recognize the existence of cultural differences, meet challenges with an open mind, establish an effective communication mechanism, and win the other party's sense of identity and belonging;

6. Take overseas mergers and acquisitions as an opportunity to enhance the company's international operation and management capabilities, establish a training mechanism for international talents, and formulate long-term financial goals on the basis of merger and acquisition strategies.

Ⅱ. Typical problems encountered by enterprises in the process of overseas mergers & acquisitions mainly include:

1. Lack of a clear post-investment integration and restructuring strategy;

2. It is difficult to identify areas where the business of both parties may produce synergies, resulting in the failure of the two parties to properly allocate resources in terms of market, operation, capital, technology and personnel;

3. Ignoring the risk of personnel integration, resulting in the loss of the acquired company's management team and key employees;

4. In terms of overseas business management and control, no balance has been found between "delegating power" and "receiving power".