Using a Capability Model for M&A Integration Planning

Integration planning compares two organizations that describe themselves differently: different org charts, different system landscapes, different names for the same work. A business capability model gives both sides one vocabulary, so the comparison is about what each organization does, not how each happens to be arranged.

Mapped onto one model, the two organizations show where they overlap, where one has a capability the other lacks, and which capabilities are the reason for the deal.

The Method, in Six Steps

  1. Pick one capability model for both. Use a single model as the common frame, at L2 for the integration plan and L3 where the overlap is dense. Translating each side's own map into it is the first piece of real integration work.
  2. Map both organizations. For each capability, record which functions, roles, locations and applications perform it on each side. The same mapping, done twice, is what makes the two comparable.
  3. Find overlaps, gaps and crown jewels. Capabilities both sides perform are where consolidation is possible. Capabilities only one side has are additions, or gaps the other side brings. The capabilities that justified the deal are the crown jewels: protect them first.
  4. Set the integration stance per capability. Decide, capability by capability, whether to keep both, absorb one into the other, combine them into something new, or leave the acquired one standalone. The stance can differ across capabilities in the same deal.
  5. Trace the applications and data. For each capability being combined, list the applications and the data entities on both sides. Data that one side creates and the other only reads is where cutovers break.
  6. Sequence the integration. Order the moves so customer-facing and revenue capabilities keep running, and crown jewels change last or not at all.

A Quick First Pass

The free M&A Capability Overlap Scan gives a first view before the full mapping: paste the acquirer's and the target's capability lists and see the overlaps, the crown jewels and the complementary capabilities.

Run the M&A Capability Overlap Scan

What the Packages Provide

Every Capstera AI-ready Capability Model and Blueprint includes a Capabilities Relationship Mapping Templates workbook, pre-filled with the package's L2 capabilities, with blank rows for your own.

For integration planning, its sheets map capabilities to:

  • Functions, roles and locations, filled in once for each side.
  • Applications and systems, scored as high, medium or low footprint.
  • Data entities, recording which capabilities create, update or read each one.

Questions

Why use a capability model for M&A integration?

The two organizations describe themselves differently. A single capability model gives both one vocabulary, so overlaps, gaps and the capabilities that justify the deal can be compared directly.

Whose capability model should the integration use?

Whichever both sides can map to without distortion. A neutral reference model often works better than either organization's own map, because neither side's structure is imposed on the other.

What is a crown jewel capability?

A capability that is the reason for the deal, or that the combined organization's value depends on. It should be protected through the integration, and usually changes last or not at all.