Smoothing the process of M&A activities

Merger and acquisition (M&A) activities can place considerable stress upon the organisations involved. It is therefore essential for leaders on both sides of the M&A ‘equation’ to be proactive in the manner in which they go about bringing their businesses together to form a new, cohesive whole.

The issues that are faced during what is a period of considerable upheaval for staff and stakeholders alike are numerous. It therefore pays to have a proper understanding of what M&A actions will likely entail and the impact these activities will have at every level of an organisation. Preparation, understanding and due diligence really is the key to success.

Pressures on management from the outset

During any M&A activity, there are pressures on every part of a business to carry out the process as smoothly as possible and to deliver immediate results that will ensure those backing the merger can see they made the right decision.

However, it’s not as simple as bringing together two existing companies and expecting everything to gel; new and unexpected challenges will always emerge during the course of the integration process.

Indeed, a 2015 study carried out by KPMG revealed that 83 per cent of deals fail to meet the full expectations of stakeholders. The main reasons for this were cited as poor communication, inconsistent leadership and cultural dissonance between the two merging parties.

The report highlighted the need for organisations to take seriously the matter of helping staff to transition to the new corporate structure, as some of the strongest prohibitors to successful cohesion are nearly always people-related.

Moreover, while some see the completion of the legal process as the finishing line, in reality this is simply the starting point for the hard work that will ensure the delivery of the anticipated benefits for all stakeholders.

Successful alignment of corporate values is key

What needs to be made clear at the outset of any merger or acquisition is the rationale behind the change and this needs to be conveyed to all those who will be affected within each business.

A compelling case needs to be made to all stakeholders so that their ‘what’s in it for me? questions can be answered convincingly and authentically. Doing this proactively avoids a situation that can occur when people are not well communicated which results in groups ‘hunkering down’ in silos and finding reasons for not accepting the merger. At this time, in the early stages of the merger process, it is really valuable to focus on the bigger picture and understand that it is not a matter of winners and losers, but rather that everyone is in this together and they should be doing all they can to ensure the new whole becomes greater than the sum of its parts.

Information is everything when it comes to reassuring staff that the changes which are taking place will be of benefit to all. It’s therefore essential to keep all areas of a business informed of what the new corporate structure will look and function like when all is said and done.

Undoubtedly, some areas of a business will witness greater changes than others – for example, there may be duplication after a merger that means cost savings (and possible job losses) could occur. It is imperative that this does not come as a shock to staff, and this can be achieved by ensuring management and leadership teams are open and honest with the rest of the business.

Celebrating the past is also a positive step that can help to ease the transition to a new corporate whole, with members of staff being showcased the successes of each former business and the fact that bringing the two together should now lead to even greater success in the future.

Creating a sense of grounded optimism surrounding M&A is essential. By doing so, it ensures the new, larger organisation can get off to a fresh and productive start on the best possible footing.

Cultural assessment can provide a clear vision

One of the best ways to understand the true nature of any business is to assess the personal and cultural values of staff, and by doing this during an M&A process it can uncover the driving forces at play within each organisation, as well as areas where there may be cultural overlaps.

Leaders are typically unaware of the behavioural dynamics that are driving the different cultures and the aspirations of the employees relative to the development of the company. Understanding the nature of the merging cultures from the onset can dramatically impact the success of a merger. This information provides leaders with the inside track to successfully articulate and lead new initiatives, what to focus on regarding cultural development and what to avoid.

The Barrett Values Centre cultural transformation tools (CTT) can be deployed to shed light on the cultural values at play within each corporation. The information and resulting analyses provide insightful ‘compare-and-contrast’ reports to highlight where the cultural common ground is between the two organisations and to support the creation of plans to avoid misalignment of values. Identifying early the areas of cultural alignment and of potential dissonance enables businesses to develop the most effective and engaging workplace and avoid problems moving forward.

Doing this enables leaders to develop a clear vision for the new organisation and gives them the platform to support to all staff to buy into this. Carrying out what we call ‘cultural due diligence’ in this fashion also ensures all areas of the business have a clear understanding of how their efforts will ultimately lead to success.

At the same time, it can help to uncover potential cultural issues that could arise during the melding of business functions – for the savvy leader, to be forewarned of potential clashes in culture is the best way to be forearmed and to do something about it.

A note of caution, though: changing ‘culture’ itself is very difficult. What successful change programmes can do is to enable leaders to create the conditions in which cultural change happens naturally i.e. the change becomes the expected norm. Focussing on leader behaviours, for example, will usually cause an evolution of culture. Critical to that evolution is the authenticity and power of the leaders’ core values.

Organisations keen to eliminate the stumbling blocks that could easily cause a merger or acquisition to be less successful than it could be should therefore take heed. Listen to the fears and hopes of staff and come up with a coherent communications plan to address these concerns; leaders must remember that the human collateral which makes up any business is ultimately its strongest and most valuable asset.

You can learn more about the process of Barrett Values and the outcome of Primeast’s very own foray into developing a better understanding of our corporate culture by reading ‘Barrett Values at Primeast: Why we took the test by Gary Edwards‘.

  • Article by David Evans, Head of Consulting at Primeast