History boasts countless examples of loyal soldiers, athletes, and citizens in difficult predicaments that choose to rally behind their leaders and forge on rather than crumble. What do these tales have in common with Mergers and Acquisitions?
Well, similar to the above scenario, captivating and capable leaders during times of post-merger integration have the ability to rally nervous employees and get them to buy into a new vision. The lesson here is a simple one related to human nature: people will follow the leader if they believe in the leader and his/her mission.
Because robust integration practices are essential for maximizing deal value, post-merge integration planning and the integration team’s participation need to take place long before the deal is announced. More and more M&A practitioners are understanding this, but post-merger integration operations (even those at major acquirers) still miss the mark because the all too important “people” factor can get lost in the shuffle of modern business life.
This misstep can lead to loss of employees and clients during the very critical early days of post-merger integration when competitors tend to go after both employees and clients of the target company. With this in mind, integration practitioners need to be ready to execute and communicate on day one important information about targets, employees’ positions and benefits, and the future of the company.
Since strong employees are key to a company’s success, here are five industry proven ways for your post-merger integration team to create a successful, people-focused integration:
When the acquisition is announced on day one, your M&A integration team must be present at the acquired company’s offices. Sometimes the employees of the target company do not know anything about the deal until the announcement is made. You, and your integration team, need to be on site to answer any and all employee questions. You must remember these employees have their own lives, families, and unique situations that are supported by their current jobs; they will be feeling a wide range of emotions, and they will need guidance and information.
Fortunately, there are small things you and your team can do to connect on a comfortable and genuine level with these employees. For example, find out ahead of time the culture and the dress of the office; the last thing you want is to show up in a suit only to find the office is very business casual. In this type of situation, employees may be too embarrassed or uncomfortable to come sit and talk with you because of their dress - if they didn’t know about the deal beforehand, they would not have been expecting visitors. In addition, we recommend you walk the halls and try your best to socialize with the employees.
Find out as much as you can about the people in the business. Finally, be sure to bring business cards and provide the employees with your contact information so they can reach out to you as questions and concerns arise.
Similar to the above sentiments, as you get to know the people involved in the business, you also need to get a good feel for the top managers and if they are ready and open for change. Do they have what it takes to help you, the acquiring company, implement change? Do they have strong change management skills? Do they have what it takes to get employees to buy in to a new target?
When you close an acquisition, you need a winning team mindset. This suggests you need to share with the acquired company your target and the belief that this target can be met. The last thing you want is for the acquired company to have any sort of “underdog” mindset, stemming from the notion that the acquired company and its functions are less valuable because they were able to be acquired. It is essential that all parties involved in an acquisition feel empowered to contribute to the newly formed organization's success.
An example of this concept can be evidenced in an acquisition between two large established companies. Both companies’ employees are unsure what the acquisition means to their positions. What, if anything, would change about their day to day work routines? Would they still work with the same people? Conduct projects in the same way?
These feelings of uncertainty, while natural, could have been easily addressed and somewhat reduced through stronger integration practices - namely, practices that remember it is the people who make a business thrive, and therefore, the people need to have a winning mindset, not one clouded by uncertainty and an underdog mentality. Addressing seemingly small questions upfront, such as day to day changes, helps to ease the tensions that come along with mergers and acquisitions, making for an overall smoother post-merger integration.
VDRs and project management platforms, such as DealRoom, help to ensure all stakeholders have access to important information throughout the life cycle of the deal, which significantly helps with integration planning. After day one, the flow of this information often slows down, but this information and how it is shared is still vital to ensure a successful M&A integration. Having a user-friendly, intuitive, secure platform for dispensing information is key.
DealRoom is especially helpful for M&A integration planning and execution because of its features related to efficiency. For example, DealRoom eliminates duplicate requests - a thorn in the side of busy stakeholders. In addition, DealRoom’s improved visibility across a project aids the M&A integration process from the initial stages.
Specifically, items for integration consideration can be easily tagged for future use. While VDR use is common for assessing deals, choosing a VDR like DealRoom that offers practical tools to assist with successful integration is the wise business choice in the world of M&A.
Recognizing and cultivating the human aspect of integration are essential aspects of successful mergers and acquisitions. Strong, respected leadership that can articulate company goals and clearly demonstrate the value each employee brings to the achievement of these goals is critical to positive M&A outcomes.