Mergers

Mergers & Acquisitions: Simplify Complexity

Your company has just announced that they have bought another company. Or your company has just announced that you have been bought. Contrary to what many business leaders think, the hard part is just beginning. A merger of two companies or the acquisition of one company by another is a challenging change no matter which side you are on. Following these few simple guidelines can help you simplify the complexity of it all.

Acknowledge the Winners and Losers

The single most important thing a business leader can do in a time of merger or acquisition is to acknowledge that even a merger has a side that wins and a side that loses. It isn’t something that has to be announced, most of your employees know it already, but it is important to acknowledge it and work accordingly. The most disconcerting thing, and the most disruptive thing, for an employee at this time is to be told that the two companies being merged will be “equal”. It rarely turns out that way. One President or CEO is going to be the head of the company. One Vice President of Operations is going to be chosen, one Vice President of Sales, Marketing, etc. Sometimes the spots are divided equally, but more often the President chooses individuals they know and are comfortable with. That is human nature, and that principle will be carried down the line. There is nothing wrong with conducting a merger that way, the important thing is to NOT stand up in front of the entire merged company and say that each side is equal. Credibility, and productivity, will both take a negative hit.

It is better to focus on what the new merged organization will look like, acknowledging that people will lose their jobs, some will be moved around – whatever is relevant for the situation. People will lose their jobs not because they haven’t delivered business results or are incompetent (although that also may be the case) but because in the new merged organization there isn’t a place for two similar positions.

Realize that no matter how equitable leaders in a merger try to make the decisions of who gets to keep their job and who doesn’t, an employee will consider themselves either winners or losers in the whole affair. Having transition schedules and other plans can keep employees focused on moving forward either inside or outside of the newly created company.

Make Choices Quickly

Since productivity suffers most in times of ambiguity, it is essential that people know their fate, one way or another, as quickly as possible. In fact, if possible, the leadership of the organization should be decided upon either before the merger is even announced or immediately afterwards – within a week. Dragging decisions like that out for weeks and months will have your employees working on everyone BUT the work at hand. Announcing the change with no additional plans in mind (you might laugh but I’ve seen it happen. Ed.) can wreak havoc on employees and ultimately the business. Keep in mind that a merger or acquisition is to improve business, not diminish it. Doing everything possible to get over the initial shock quickly and then get back to the business of being successful is in everyone’s best interest. The responsibility to lead by example lies squarely at the top.

Don’t make the mistake of letting two people do the same job and see who rises to the top after 4 or 6 months (you might laugh but I’ve seen it happen. Ed.). Another mistake is creating an extra layer – one Senior Vice President and one Vice President – and then wait until one of them can’t take it anymore and leaves. Any decision like that is a non-decision that makes everyone’s life more complicated – and in the end negatively affects the bottom line.

Remove Obstacles

The goal of leadership in any merger or acquisition is to remove as many obstacles to success as possible during the first 6 months. This may mean changing a process to changing an individual. When two different companies who do essentially the same business are merged together there will still be differences, some small but some great, in how they do business. Making sure one way is chosen, and again, quickly will be a critical leadership task. Sometimes there is an individual who is acting like an obstacle and it is leadership’s responsibility to either help that person act differently or help them find another place to add value. There are lots of reasons why people act like obstacles in a merger or acquisition situation. Diagnosing the reason and finding a mutually beneficial result is one of the most important things the new leadership can do.

Create a New Identity – For Everyone

From the very beginning, at the first announcement of the merger or acquisition, leadership needs to begin creating a new identity for everyone in the company. Even in an acquisition, the company will not be the same as it was prior. It will be important for everyone to understand and begin to act as if they are a new entity, one that didn’t exist before. Creating an entity that everyone can be a part of will hasten the speed at which people will settle in to the new “normal”. If the name is being changed, that sometimes makes it easier because it can be a new name for everyone. If the name of one company is being taken instead of another, it will be important for everyone to see themselves in the operating principles that follow. This work is best done, as has been said before, quickly, so the work of getting everyone to see themselves as a productive member of the new organization can begin immediately.

Internal Mergers

Sometimes there are mergers within a company. Two departments are put together, or two sister companies are merged. Although the situation is somewhat different, the basic principles still apply. People will still feel like there are winners and losers and that may cause disruption in productivity. Acting quickly, removing obstacles and creating a new identity everyone feels a part of will be critical in the formation of a new and productive group.

Conclusion

Mergers and Acquisitions can go smoothly with excellent results if attention is paid to those who will ultimately decide if it was successful – your employees. Trying to keep them focused on the business at the expense of helping them create their new identity will have long term negative effects on the newly formed company’s bottom line. This kind of event can be fraught with emotion – positive and negative. Concentrating on getting set up to operate as a new entity quickly, removing any obstacles that come along and creating a new identity for everyone will minimize the down turn and set up the new company for unlimited future success.