I’ve posted previously on the futility of the classic organisational structure analysis when it comes to M&A (you’ll find the link here). A good friend and ex-colleague came back to me with an excellent challenge…easy to poke holes in it but what’s the solution?
Let me respond and come up with some ideas on how to do this more effectively given the constraints of an M&A process pre announcement, notably:
- Limited access to the target (data room, a weekly submission of questions of which this is only one component and a single round of management interviews)
- Time (typically 3-4 weeks)
- The prevailing leadership attitude towards so-called ‘soft’ issues (see here for my views on that particular bugbear…worth a read when you get a moment)
Given these constraints, what are the potential avenues of enquiry to identify influencers? I’ve set out a few ideas below (all of which should be accessible in the above environment). These have delivered interesting results in the past for me:
Floor plan…note who occupies the corner offices, how the functions are arranged and who they are next to, who occupies the most and least desirable locations. How are the floors arranged (open plan, offices at the windows or at the core)?
Minutes of meetings for operational / risk management / strategic decisions …note if those attending are consistent or if there are a small number of people that attend both. Those contributing the most and the least are often good indicators of influence.
Individuals who are involved with the data room. They are often quite junior but both the function and the person they work for have ‘natural’ access to information which suggests influence and sponsorship.
Attendees at the management interview day. Beyond those whom you would expect to attend, there are often 2-3 people who, from a seniority perspective, do not necessarily match those around them. They will often attend more than one breakout session and functional owners will defer to them for technical or historical context.
Segmentation of the leadership team (from their background, length of service at the company, previous experience, functional skill set, academic background, network and relationships internally and externally, social media presence). Creating groupings based on some of the above will start to identify networks which are much deeper and go beyond the corporate environment.
Owners / sponsors / leaders of any non BAU (business as usual) programmes of work. Creating groupings around specific business critical initiatives identifies those that are trusted with broad, cross functional projects.
What’s your output?
A heat map of influencers with their connections and areas of control scoped out. The networks which exist can also start to be mapped out on the same document.
What’s next post announcement?
- Using email / Yammer / corporate social network tools data analysis, the above can be corroborated with quantitative data based on communications flows in the organisation.
- Using the increasingly frequent and often informal contacts with the target, give your integration team the task of asking the same question at every occasion: Who are the top 10 most important people in this organisation for your success? Map the results to the heat map.
Your qualitative heat map starts to take on a little more quantitative rigour.
Why’s this so important?
You as the acquirer have no control between announcement and completion…in regulated industries, that can be 9-12 months. The only thing you have influence…it would be good to know who to influence.
Any survey you want to read will tell you that a core component of value destruction in deals rests with people…reduced productivity, deficient customer service / engagement resulting in greater levels of attrition, less and more tactically orientated innovation. Understanding how an organisation works is perhaps the first key step in changing this situation.
Let me know if you’ve had similar experiences…thanks.
- Left leg in, left leg out…the M&A hokey-cokey as demonstrated by the story of Valeant and SunEdison
- The love affair between Fintech and financial services – unrequited?
Categories: due diligence, Key influencers, Mergers & acquisitions, Organisational design, Organisational Structure, post acquisition integration, Post merger integration, Transformation
Tags: Merger integration, Mergers and acquisitions, Performance, productivity, stakeholder management
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