PDS On Performance

performance improvement ideas and some common business sense

The Challenge with Mergers and Acquisitions

Written By: Terry Merriman - Mar• 14•13

During the occasional conversations I’ve had with merger and acquisition advisors and specialists the most often expressed reason for failure of their transactions is the breakdown in post-transaction integration; in other words, the blending of the two organizations involved in the process. Putting together two different cultures is no easy process, and there’s no pre-existing outline, procedure, or guide that I know of for getting the job done.

Even when you begin with restatement of key directives such as mission, vision, philosophy, values, core competencies, marketing strategy, customer relationship management, operational approaches and process changes, the translation of those directives into action isn’t handled effectively. In big transitions such as a merger or an acquisition communications need to overcome huge barriers for the change to succeed.

Thinking about the problem, it seems to me that the breakdown comes in the understanding and acceptance of changes in authority, responsibility and accountability within the merged organization. It’s often quite clear what the new leadership wants to happen, it’s in converting leadership direction into individual action where the process begins to break down. People don’t readily hop aboard the new train.

Most business people have attended a training session on effective communication and related barriers. The subject is often taught in college level business classes such as Admin Theory or Org Behavior,  and in MBA programs. We know the barriers involve resistance to change, only hearing what people want to hear, different terminology or technical jargon, differing backgrounds and experiences, failure to understand the audience and a host of similar issues. People and notably leaders don’t take the time to ensure communications are bi-directional, understood, and actionable.

Getting people on board, overcoming barriers to communication, and improving the chances for successful post-transaction integration start with removing ambiguity and assumptions, documenting explicit expectations, and gaining agreement on the desired deliverables and resources required to meet those expectations. The process must be framed by defining critical success factors to which those expectations will relate and expressing those factors in the language of the leadership of both organizations.

Every leader needs to initiate the process of aligning expectations with his or her direct reports and peers, and that process needs to be cascaded throughout the newly merged organization. But leaders also need to recognize the bi-directional nature of expectations. Not only do they have expectations of their peers and subordinates, those people also have expectations of the leaders. Effective communication is not as simple as just issuing post-merger directives. It’s a complex two-way street, and when leaders don’t get it right, the merger or acquisition will be unsuccessful, or at the least, extremely painful and drawn out before the desired results are achieved, if they are ever achieved.

For you M&A Advisors out there, one of the greatest values you can offer your clients is coaching them on the essentials of effective communication throughout the post-transaction integration process. If this isn’t within your area of expertise, connect your clients with a business advisor who does specialize in this arena. You’ll be helping to keep your clients happy and improving their chances for a successful merger!

Helping blended organizations get along …

Terry

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