Unchallenged Series #2: Functional teams should lead the way

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For as long as I’ve been involved in M&A, there have been a number of accepted and mostly unchallenged rules; one of them has been that post integration programme structures follow that of due diligence, ie we will run the integration on a functional basis. The logic is simple:

  • It reflects the organisation structure of most acquiring and acquired businesses and it is well understood amongst stakeholders and reflected in the governance structure.

  • Functional expertise is established and it’s therefore right to pass the responsibility to those subject matter experts

  • Consequently, you are minimising disruption (without doubt an important consideration in M&A) by maintaining this particular norm.

Those are undoubtedly all good reasons for using this type of structure. The issues to consider before you do that however, are also considerable:

  • Does your integration have deliverables which require certain functions work together? For example, is there the intent to develop and deliver a new product roadmap in order to deliver against some cross selling revenue synergies?

  • To what extent is that cross functional working requirement replicated across other parts of the integration plan? in achieving your new operating model, is there a need to bring together Technology, Property and HR to deliver the envisaged benefits…perhaps as part of a new location strategy which allocates work in the most cost effective manner?

  • How integrated are your various control functions? Risk, Compliance, Legal, Finance…all have elements of control under their authority…an important element in the early stages of an integration process but not one which necessarily requires lots of independent activity which may look like replication for the new employee base. 

Different structures manage these challenges in a much easier way. As an idea:

Why not change your integration programme and organise it as cross functional teams structured around the deliverables you expect from the deal. The extra work from people joining multiple multi-disciplinary teams may not be an overhead…what it will do is expose the required coordination between the different functional teams to deliver the benefits. 

You may find the efficiency of your functional silos to be an illusion.

Sincerely,