4 Strategies for Successful M&A Integration

In the rapidly changing world of business, mergers and acquisitions (M&A) are a driving force for growth and innovation.

Current The mergers and acquisitions landscape is diverse, shaped by changing market conditions and the pursuit of strategic benefits. Although transaction volumes are down 25% Compared to the first half of 2023, fundamental M&A drivers — such as strategic growth, new product lines, technological advances in new markets, regulatory changes and the pursuit of market leadership — continue to drive activity in sectors such as healthcare, real estate and insurance.

In this context, the insurance industry is a good example of how the rules successful mergers and acquisitions have universal applications. Insurance, which is fundamentally a people-centric business, emphasizes the importance of aligning cultures, integrating operations, and leveraging synergies when acquiring other businesses. I believe the lessons from the insurance industry’s approach resonate across industries, emphasizing the need to understand and value the human capital in every transaction.

Top tips for integrating acquisitions in 2024 and beyond
Successful acquisitions are built on a foundation of mutual respect, shared vision, and effective integration of diverse talent and expertise. Here are four key takeaways that strengthen M&A integration:

1. Culture is the most important
Culture should be the deciding factor in the success or failure of any acquisition. When considering an acquisition, assess whether the culture aligns with your own. Our management philosophy is based on two pillars: employee sentiment and customer satisfaction. People are the essence of culture.

When acquiring a company, make sure the company is comparable and adds to the culture, never subtracts from it. We identify key customer relationship people, ensuring they remain part of the team, and conversely, we look for redundancies in back office support and corporate functions to streamline operations. Integration of physical offices also plays a role, especially in a post-COVID-19 world where hybrid and virtual work models are more prevalent.

Bottom Line: Never make an acquisition if the company culture doesn’t fit your needs.

2. Expect delays and additional costs
The art of integration is all about people, which means things can change quickly and unexpectedly. Be realistic about the amount of time and money an integration project will take. For this reason, it would be wise to provide yourself with a cushion.

One of the key aspects of integration is system alignment. Selecting the right system, transitioning from legacy systems, and training new employees on those systems are key steps that impact both time and cost. Often, the systems of the acquired company are outdated, requiring a comprehensive migration and integration plan. The goal is to operate with as few systems as possible, ensuring a smooth transition, operations, and future growth.

3. Build critical mass, a stronger sum, or fill opportunity gaps
Every acquisition serves a different purpose. Some acquisitions are made to gain critical mass, where the combined entity is stronger than the sum of its parts. Others are strategic, filling gaps in our service offering or introducing new capabilities.

The foundation of a successful integration is a clear growth strategy. How will the new acquisition contribute to overall growth—whether through cross-selling, new product introductions, or leveraging existing customer contracts? For example, if the acquired business has older employees, we need a succession plan and need to train younger staff to ensure continuity and strong customer relationships. In addition, understanding the timeline for the owner’s involvement after the acquisition and planning for his eventual retirement is essential. Assessing these factors helps ensure that the acquisition drives growth.

For example, when we acquired an employee benefits (EB) company, we not only enhanced our benefits profile, but we also gained a leader who could drive our EB strategy forward. It’s important to assess the growth potential of any acquisition, whether through cross-selling, new product launches, or leveraging existing customer relationships. The right acquisition can propel your business in new strategic directions.

4. Be prepared to change direction
No acquisition is perfect, and there will always be unforeseen challenges. The key is to identify issues early and find solutions that minimize disruption to both employees and customers. Integration is dynamic and constantly evolving, with unexpected obstacles that require quick thinking and adaptation.

In a people-based business like insurance, it’s essential to be flexible and willing to change direction when necessary. The entrepreneurial spirit of making lemonade out of lemons is key—failure is never an option.

Prioritize People for Acquisition Success
Ultimately, successful acquisitions depend on understanding and appreciating people, preparing for the unexpected, and continually evolving your integration strategy. As the projected M&A volume is expected to increase by 20% By the end of the year, many CEOs know that dealmaking is key to achieving growth goals in 2025 and beyond. Whether it’s a technology acquisition, the incorporation of a promising startup, or adding manufacturing capabilities to your existing toolkit, M&A has the power to both take your company to the next level and transform it into something entirely new at the same time — when you do the integration right.