Six Steps to Successful M&A (Team) Integration – The Art of Balancing Leadership, Style and Sustenance
Whether you agree, or disagree with a Merger and Acquisition (M&A) trend and strategy, as a company leader, you will highly likely, sooner or later, be involved in yet another merger and/or acquisition. For example, given the changing R&D and Economic landscape, a prospective new wave of mergers and acquisitions in the industry seems just a matter of time.
Cultural incompatibility is often cited as the #1 reason a M&A fails – Is it really? What may have been a ‘good idea’, turns often into an avalanche of post-merger issues, as was highlighted some time ago during a webcast by Joe Aberger, President of Pritchett, LP, a specialized intellectual capital transfer firm, specialized in change management and merger integration. Issues are often camouflaged and presented as divergent leadership styles, incongruent operating practices, employer resistance, poor communication, high personnel turnover, low morale and internal conflict. Mr. Aberger also highlighted the true #1 reason why M&A’s fail – A too high premium paid, resulting in an overpriced business deal. In other words an unjustified premium, which cannot be (timely) recouped.
I will not discuss this type of M&A in this article, as I assume you and your team have done a thorough due diligence, including a diligent cultural assessment (with Human Resources’ involvement) and paid a price which can be recouped and true economic value can be created from the ensuing merger synergies. This way, the integration activities will not be overshadowed by an insurmountable economic barrier, a race against time to recoup merger cost and a general underlying value and organizational destructive process.
Having taken the above into account, the question becomes, how does one effectively integrate a new organization, integrate two companies and form a new team, a new organization?
Here are six steps on how to make your next merger and/or acquisition successful and your life as a leader increasingly fulfilling and efficacious:
Define a well-articulated and (viscerally) understandable integration strategy and actively communicate this personally and through the leadership team, speaking the truth at all times
Create targeted and focused communication, and share it at the right time to the right people with the right level of emotion. As a Leader use meetings as a principal platform to model excellence, enthusiasm, engagement, learning and to re-enforce the new corporation’s values. When questions arise, deliver answers truthfully and do not avoid emotions, but manage directly and upfront. Welcome people interaction and certainly do not be afraid of it
Create unity in the senior leadership team and define ‘bad’ relationships during the due-diligence phase and actively eliminate them immediately upon closure of the deal
You need to take careful action from the beginning and focus on creating an integrated, diversified and well-qualified collaborative senior leadership team, capable of not only collaborating on the development of the new organization, but also supporting the strategy execution of the new company moving forward.Remember that ‘the bottleneck’ is always at the top – be mindful about creating an all-inclusive diversity
Expeditiously determine who stays and in what role and who goes, being fair, yet focused and decisive
Your goal is to diligently and transparently develop the required roles for the new organization and to ‘hire’ the best talented people to do the job. By being transparent and ensuring senior leadership involvement in the process, you keep the whole process human and balanced. Remind yourself that every one is watching – all the time. The way you manage this process is equally important for those who “stay” as for those who “leave” the new organization. You need strong team support to build the new company and you can for sure use any support in the market, by the people who leave
Address people as people – human beings with beliefs, values, experiences, and emotions, usually with goodwill to support and help to succeed the new organization
Let the new company’s vision, mission and strategy guide the people and the teams. Confront misalignment actively and directly. As you treat people as people, you create collaborative success, you build successful teams, you act with integrity, you build innovative platforms in your organizations and you are ‘we’ focused versus ‘I’ focused. Simply put, you show by your behavior and actions to value human contribution, a key and fundamental organizational building block of the new organization
Acknowledge and personally accept that mergers and acquisitions are often not so much about merging the processes of the two merging companies, but about people relationships, the culture of the two companies and the targeted new and integrated company culture
This is why it is so critical for a leader to be visible and actively participating in presenting the vision of the new organizational culture, so every one can start effectively contributing to its development. Also, be reminded that informal working relationships, often times “key” to successful collaboration within the individual organizations, are now broken, and will have to be forged anew
Set the behavioral examples for the culture and the merger’s effectiveness, or the lack thereof
A failed merger is mostly a result of misaligned leadership communication, and the resulting low levels of employee engagement. The challenge leaders of merged organizations face head on, is how to move from a state of (mostly) distrust, to a state of trust, all the while the new organization is being build, clients need to be served and innovation, productivity and profitability need to be guarded. Stay mindful about and personally support the free flow of communication – All communication, the good, the bad and the ugly. You know when communication is free flowing, when people will easily come up to you, to share, to comment, to provide ideas, to deliver ‘bad’ news, etc. They are clearly not afraid.
As you will move with your new organization into, what in my view will turn out to be one of the most competitive markets since decades, you will need an active communicating work force at all levels and leadership supporting your people in making innovation and enabling customer success. Integrating a new organization is and remains first and foremost a people issue – employees and clients need to be involved timely and appropriately. Your role as a leader is critical in shaping the post-merger/post-acquisition desired behavior and actions, in short creating the new organization.
Can “it” be done? Yes, I think so. If you cover the above directly in your own work, or indirectly with your leadership, you will be well on your way to make the (team) integration a success, to the organization, to the customers, and to its stakeholders.
After all, leadership matters. Managing a M&A integration is principally managing (human) capital efficiency – Do it balanced and well and your organization will strive – the alternative is not an option for a fiduciary responsible leader.
Wishing you much success and welcome your thoughts and comments!
This article was originally published in Leadership Matters on 09 May, 2013