When two worlds collide they can either integrate becoming larger than the sum of their parts or they can be destroyed.
Truly successful Mergers & Acquisitions look beyond the likeness of the businesses, products or services to aspects such as processes, people and culture. There are many stories within organisations of mergers, joint ventures, and peaceful acquisitions that have gone array due to the human element and culture being ignored or just completely forgotten. The cost to organisations is beyond prediction. It’s even more challenging with acquisitions or take overs that already have an underlying threat and emotional distress for everyone involved.
Throughout my career I’ve seen a variety of these, those that seem to be almost seamless and those who create and “us and them” culture which is completely counter intuitive to the intention of the integration.
So how do you go from the risk of the worlds exploding to one of what sometimes seems the dream of integration? Here are my top 10 tips to making sure your M&A is a true success (in no particular order):
1. Look into processes and what works well in both organisations, and the areas of improvement. Ask employees, customers and other stakeholders.
2. Take time to diagnose the cultures when doing your due diligence. There is nothing worse than acquiring a company because their market, products and/ or services seem to be the perfect match, and only notice once you start the integration process realise they are actually completely different in mindset, leadership styles and culture.
Just for arguments sake let’s say you are thinking of acquiring a company as part of the diversification of products you offer. The company seems the perfect fit, they already have some similar clients, a good brand, and a whole load of new clients too. Your organisation is still very traditional and it has grown being risk adverse, still has processes that require a lot of board meetings to agree big decisions, and leadership although open to ideas are still quite hierarchical in their thinking. The possible acquisition has grown from a group of entrepreneurs who still lead like they did back when they were small, they delegate as much as they can, and they are the visionaries. Although there is a hierarchy in structure, they are used to making decisions fast so there are no formal boards and if anyone has an idea they can go straight to the senior leadership team and propose it, usually followed by a “yes” or a multitude of questions to bring about a well thought proposal. So although they seem a perfect partner in paper, if no pre-work is done in regards to preparing people for a big culture change, it will be difficult to integrate. An employee from the acquired company will find it hard to navigate in what they will consider a much more risk adverse culture and will end up having a difficult relationship with management if they do not understand why the bureaucracy is needed. This also works the other way around, where an employee from the larger company may find it hard to understand why the newbies are trying to pressure them all the time around speed and develop resentment or added stress to their relationship.
3. Keep communications consistent in both organisations during the integration process.
4. Involve people from the beginning. The more you get people talking to each other, looking at how the new world can work, solving problems together, you are already starting to form relationships which will then flow into the new organisation.
5. As a leader be open to the idea that there are better ways to do something. Develop your emotional intelligence to be able to accept challenges, listen and develop the readiness to receive new ideas.
6. It’s not about you and them, it’s about us. Pay attention to the language you use, both as leaders, change agents, and as an organisation. Language is a massive tool for integration both written and spoken; make sure you are using it as an advantage. There is also no better diagnostic tool than hearing the words people use. Have you ever heard an employee from an acquisition still refer themselves to as employee of their former company? Or blame their new company processes for something openly or even worse to a customer that is now a customer of the new company?
7. Create a strategic narrative. One of the enablers of employee engagement (for more information please visit engageforsuccess.org), and a particularly important one when talking about M&A. This strategic narrative needs to contain a clear vision of the future (which can be developed in collaboration), touch upon the successes of both companies in the past and the why they make such good partners
8. I’m sure we have all heard the term hostile takeover. Well if you look at point 6 you`ll realise how aggressive and emotionally charged this term is. No wonder people affected by this type of acquisition immediately put their defenses up and decide to either sabotage the effort or resist the integration. So what can we do? It is quite simple really: take care of people. We know that sometimes people will need to be redeployed or let go when M&A’s happen, however, the more human we deal with it the smoother the process will go and the less damaging it will be for the organisation that is left. Some ideas are run CV workshops and soft skills workshops that will enhance employability. Partner with a job search board to help your employees move on and offer all support possible including time off to go to interviews.
9. Create something new. Instead of trying to merge two identities into one, why not just create a new one? A good approach to do this is Appreciative Inquiry involving as many people of the new organisation in the room. Start dreaming of what this could be, it doesn’t even need to be the best of both worlds, it can literally be something completely new!
10. At the end of the day remember that organisations are all about relationships. People work with people, and work is smoother and more productive when relationships are established. Focus on culture, as much as, processes and you will see success.