Inarticulate ramblings of a management consultant

the day to day experiences of a consultant operating in weird and wonderful client situations

Mergers and acquisitions are here to stay

It appears that with the renewed interest in deals in the UK (primarily generated by PE), we are once again embarking on a bit of deal mania.

I often think that I’ve dedicated the last 23 years of my career to an activity which is entirely defined by the famous quote about madness…to paraphrase, doing the same thing over and over and expecting a different result. Why is this? The reason is simple: Mergers and acquisitions offer opportunities for CEOs in every type of situation; defensive, growth orientated, focused on the need to diversify geographically or by customer/product, or lets be clear, for those CEOs keen to leave behind a legacy. In many ways, acquisition as a solution is too easy – although perhaps less so now than in the early 2000s. But the decision to acquire or merge is often based on good strategic rationale, coupled with the ‘heat of the moment’.

The reality is however that the effort involved in successfully integrating is huge and highly complex. Any attempt to ‘commoditise’ the process is fraught with danger – each transaction is different and the lowest process common denominator will need so much revision as to render it useless on the ground.

There are however a few things which raise the likelihood of success:
1. Treat each acquisition as if, instead of buying a company, you had commissioned an executive search/recruitment company to find you the equivalent number of senior, or technically gifted, or operationally skilled employees. Think about the effort you would expect your senior managers to make, to induct, motivate, manage and get the most out of their new colleagues, and apply that thought process to your deal. There are very few people who show loyalty to a company which they didn’t volunteer to join.

2. Manage the communications process as if you were a receiver of information – what do you want to hear from your new management team, and what channel is going to be most effective for you.

3. ‘Focused integration’ so that the things which are critical to your strategic objectives are the first things to be delivered. If you are buying a business because of its innovative capability, find the innovators before you complete, get them networked into your own equivalents and give them a task – a new product within three months of completion as an example. If you are buying because of the sales channel, focus on the sales team first. Understand from them the best way to get them familiar and willing to sell your product and put reward structures around the function to motivate them to deliver.
Make sure that the people from the support functions involved in integration understand something about managing change, and not just compliance!

4. If you need to change the culture in your newly integrated company, change your own behaviour first. Find an opportunity to demonstrate the change you require in your own actions and watch as others follow you.

5. Finally for each piece of process you use to create the newly integrated business, also use one people-related action. If you are considering developing a new target operating model, create a vision and mission statement which describes the company in 2 to 3 years from the perspective of its customers and employees. For every piece of process re-engineering, engage with the key influencers and ask for their help in shaping and implementing it.

To conclude, the biggest challenge in any integration is maintaining performance or productivity, be that with regard to customers, service, quality, innovation or output. At the heart of the productivity challenge are your employees, and with no intervention their productivity will fall, potentially by some considerable percentage. Creating some mitigating actions to prevent this from happening or minimise its impact is no longer a ‘nice to have’ strategy, it should be core to your integration effort.

Categories: Complex transformation, Human Capital, Mergers & acquisitions, Post merger integration

Tags: , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s