The word “merger” often evokes images of powerful collaborations and formidable partnerships. While business mergers or acquisitions are generally full of promise (at least at the onset), the full benefits won’t ever come to fruition without successful post-merger integration.
The Harvard Business Review reported in a recent article about post-merger integration: “Since 2012, M&A activity has increased dramatically in both number of deals and size of transaction, with the yearly value of global M&A deals tracking above $4.5 trillion for the past four years.”
In terms of both big and small deals, the last several years have been very active on the M&A front. Every merger or acquisition completed results in, at minimum, a new owner or ownership team coming into the acquired company, and at maximum, two completely independent staffs merging. This means that at least some degree of integration will be required in nearly every situation. Despite the strategy and rational for making a deal, including potential efficiencies and synergies, realizing its full benefits depends on what happens after the two companies and respective teams become one.
Finding ways to make the post-merger integration faster, smoother and ultimately more successful should be the highest priorities for the integration team. There are no simple shortcuts, and a “wait-and-see” approach to planning, communicating and executing the integration strategy will not typically lead to success. In an Axial Middle Market Review article, author Dan Bradbary cited an EY study in which 80% of respondents said that “increasing the speed of the integration process was something they should have focused on.” The information void that results from a delayed post-merger integration process leaves more time for speculation and uncertainty.
Within the merged company, different management styles can create division. A lack of communication, or being unaware of a merger until the last-second, can breed feelings of disloyalty and lead to mistrust. In addition, unfamiliarity with new department dynamics can prompt feelings of alienation within the merged organization. These are only a few of the potential issues that a merger could awaken, if the transition team isn’t fostering and promoting a “same-team” mentality and positive culture.
Building a culture of “same team, same goals” will translate into people being more willing to adjust and change. Have meetings, keep an open-door policy during this time frame and continually promote the idea that you are working through issues together. Company picnics, team events and contributing to charitable causes are some ways to help the previously different teams find some common ground.
While there are many reasons why the news or actualization of a merger may need to be kept “under wraps,” the advice remains the same. Being proactive in planning and strategizing ways to build a strong culture and promote a same-team mentality will help to close the “our” vs. “their” company divide, once the details can be disclosed.
Other Personnel Considerations
As the aforementioned Harvard Business Review article reports, there will likely be at least two other concerns that will result from a merger that will need to be addressed sooner than later.
First, there will always be that invisible line that separates executives from the front-line employees. That is part of the environment; these two worlds are simply driven by vastly different aspects of the business. A merger can aggravate that omnipresent situation, but consistent communication can help soften the divide.
Second, employees at any level are at risk of being let go as a result of a merger. This could means friends, longtime associates and even family members. The solution, however, isn’t to pretend that these issues don’t exist but to deal with them, talk about them and build an environment of unity.
Operational Concerns During a Merger
While the integration team’s greatest concern will involve the people that the business relies on, the functional and operational aspects of this newly merged company must be considered as well. These operations and processes include IT systems integration, assessing and using resources before, during and after the merger and avoiding overwhelming management with M&A responsibilities.
The Good News
While there are inherent risks with mergers and acquisitions, the reward is why companies are continually willing to take those risks. With careful pre-planning, clear, honest communication and swift, proactive steps throughout the process, a merger or acquisition can end in successful integration and may become the very step that takes the business to the next level.