By popular demand (from the exclusive few that appear to read this blog), this is part 3 of a series based on the experience on a fictional CEO in an emerging market going through an acquisition by a multinational corporate. If you’ve wondered onto this blog by accident, firstly, my sympathies and secondly, it may make some sense to read them in the order that they’ve been written. The link to the first is here, and the second is here.
Imagine yourselves in the role of an increasingly stressed, slightly disconcerted and nervous CEO who is rapidly becoming the interlocutor between an acquirer whose demands seem to grow by the day, the family owners whose interest and attention is rapidly diminishing and a group of employees who are increasingly confused. So as not to confuse, it’s written in the first person.
The false summits of mergers and acquisitions
Somehow we got through the day of management interviews. What with a set of translators who were supremely confident but utterly useless (I ended up doing the translations for most of the sessions – digging into the depths of my limited business English), the refusal of my procurement head to answer any questions following the most rudimentary of presentations, and the seeming obsession of their HR person on HR Systems (we don’t have any…!), I wasn’t sure that they’d be that keen to continue. The presentation of their regional CEO was ok. He dealt with some of the practical issues, particularly after one of my braver employees asked the question around job prospects!
We announced the deal last week to the press. The adviser gave me a copy of the press release. It wasn’t what I was expecting. For a start, having announced internally that the rationale for the deal was based on market opportunities and our customer base with their IP and technical know-how really adding to our operational efficiency, the message they seem to have delivered to the market is of a takeover, implying that much change is needed in our organisation to comply with their ‘standards’. I don’t disagree….but the informal channels have been delivering a different message. A couple of our large customers have already picked up on this and were on the phone to me immediately, wanting to know what the implications for them might be.
The family has swallowed it…but only after a lot of persuasion on my part. But it’s fair to say that some of the trust amongst the employees has gone.
Rather than the pressure easing off, the announcement seems to have unleashed a whole new set of demands related to the integration.
Day 1: I’m trying to keep this information from my central team but it seems that they have a 2000 item long checklist of things which may or may not need to be prepared / done by day 1! There’s been no attempt to edit this by the way…there are items in there relating to 401k (which I believe is the pension requirement in the USA) which again suggests a ‘one size fits all’ approach to this deal.
100 day planning: I’m still confused as to whether this is the first 100 days of planning or the things to be done in the first 100 days…I’ve heard a couple of different responses so far! Anyway, it seems that there are some key tasks to achieve in that period. Everything from moving our month end closing to 4-5 days post month end (we currently complete around 14 days post month end) to some health & safety protocols which they want to introduce.
The latter is a worry. I’m completely into the concept that we need to reduce the number of accidents in the workplace…in my short time here, we’ve managed to improve this considerably. But what they seem to be suggesting is that by changing the policy, this will somehow ‘magically’ change the behaviour of the employees. I doubt that anyone here has ever read a policy! The way we do change here is by getting some of the key people in a room and taking them through the rationale and giving them a deadline, after which, everyone needs to have made the change. Take footwear for a start…I’ve been trying to get rid of the sandal in the factory for ages and we’re making progress. Critical though is that the safety boots stay in the building after the end of the shift…they don’t go home for obvious reasons.
The biggest issue however is that we seem to have moved from a set of priorities which were going to add to the performance of this business to a bunch of tasks which don’t. The original initiatives included:
- They’ve developed an ingredient for one of our products which dramatically improves its performance. I tested the concept in the market and the guidance was that we could charge a premium if we brought that in.
- Using some of their branding (jointly with our own) is going to give us access to a bunch of customers whom we’ve never been able to service before.
- Bringing one of their engineers down here for a couple of months to look at our operations. I went around the factory with one of them recently and in 30 minutes, she’d suggested about 5 potential areas of improvement. Really impressive and once the team on the floor had got over the whole ‘gender’ challenge, they took to her….she speaks their language!
Instead of these which enthused everyone, all the key functions seem to have their own pet project which they want to introduce at the earliest possible stage.
- HR wants to change the organisational structure and align the ‘grades’ with their own. I get the need to create a more meritocratic structure but what they’re proposing seems a lot of effort with what benefit?
- IT and Finance have started talking about ERPs! I don’t know how many times I’ve told them that data quality is extremely suspect in our current CRM and our accounting system is largely manual. There’s been no ownership since the family member who introduced it, left us…and it’s been messed around with by a few people since. I frankly discount most of what comes out of it! The concept of trying to integrate this with anything is a potential disaster.
- Procurement. It seems that they’re going to sack the current head….and I’m not particularly surprised given the secretive nature of the function at the moment. The real problem however is that rather than have someone shadow him for a few months and incentivise him to stay / open up his relationships, they want to bring over the policy framework (whatever that means!) from another part of their business and recruit someone to implement it. The consequences could be quite frightening.
In the meantime, all eyes are on our monthly performance. The expectations for this year were based on what we delivered last year, which was truly exceptional. Delivering that again alongside all of the above is, frankly, unlikely.
It’s difficult at the moment to find anyone with whom to have that conversation….all those involved in the deal for the last few months seem to have disappeared. Who should I speak to?
- Due diligence in an emerging market – the management interviews – lots of communication, perhaps less understanding!
- Acquisition in an emerging market – integrating the ‘ways of working’ – an exercise in futility?
Categories: 100 day planning, emerging markets, Mergers & acquisitions, post acquisition integration, Post merger integration, Prioritisation, Productivity
Tags: Behavioural change, change management, culture, family owned businesses, Functional leaders, informal communications, stakeholder management
3 replies ›
- Acquisition in an emerging market – integrating the ‘ways of working’ – an exercise in futility? | Inarticulate ramblings of a management consultant
Another great blog (this is so going to sound like family sticks together…) Much of it reminds me of my time in Africa and having to relate what I had to do to the expectations, structures and standards of developed markets. More often the issue was to do with conforming to standards (arguably culture) and it had little to do with the ultimate product. However, there were a lot of challenges over the rather less well known concept of deadlines and the vastly differing expectations from one end of the planet to the other over what these are and mean.
Bernie de Haldevang • +447770532343 • de.Haldevang@gmail.com
Good to hear from you Bernie. Your last comment is particularly interesting…the concept of ‘insert the country of your choice’ time is more and more prevalent, suggesting that time is indeed more flexible than Newton may have thought!