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CS Professional · Corporate Restructuring, Valuation and Insolvency · Planning and Strategy

Alpha Textiles Ltd acquired Beta Yarns Pvt Ltd. Six months later, the integration team finds that Beta's staff are resisting the new reporting lines and the ERP migration is stalling. Which step, taken first, best addresses the human-side integration risk?

The best first step is a joint integration team with a clear communication plan. Resistance in post-merger integration usually stems from uncertainty about roles and reporting lines, so transparent, early communication and shared ownership reduce it, whereas layoffs or silence deepen mistrust and attrition.

  1. AAnnounce immediate retrenchment of Beta's middle management to remove resistance
  2. BDelay all communication until the ERP migration is completed
  3. CSet up a joint integration team with a clear communication plan to explain roles, reporting lines and timelines to employeesCorrect
  4. DMerge the two accounting ledgers without informing staff to save time

Explanation

Post-merger integration fails most often because of people issues. A joint integration team with clear, early communication reduces uncertainty and resistance. Retrenchment or silence increases fear and attrition, which worsens the problem.

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