News recently broke, that after two rejected bids,
One of the critical errors that many businesses make is that top executives either take complete control of all the crucial decisions, delegate significant proportions of the integration work to trusted lieutenants or outsource it to expert merger managers. However, all three restrict the opportunity of the next generation having a chance to grow and they also prevent senior leadership from noting how both sides can work together under pressure.
For a successful merger or acquisition, you need to follow ten steps. These are as follows:
#1. Strategy With Finances
Create a detailed ‘objective-led’ plan that explains how the deal will enhance the corporate strategy. Include exactly how the deal will make money. During this process, your team needs to identify the top five opportunities and threats to the new business entity, after the merger or acquisition and how the company can effectively tackle them.
Finally your strategy should include a due diligence report and the proposed process of how the integration between the two entities will go ahead.
#2. Tailor Actions For The Specific Deal
No two acquisitions or mergers are the same. The most important question is: will there be any overlap after the deal or will it move you into a new market? This answer is crucial when planning the integration strategy: what do you keep separate? What do you integrate? What is the corporate structure like? Who will retrain? and how will the cultural integration process be undertaken?
#3. Resolve Personnel Issues Quickly
Your new organisation will need a strong corporate structure detailed fairly early on to avoid confusion. Give yourself a short deadline and then select people from both organisations who have the drive, enthusiasm and vision to support the successful integration. This will require some tough decisions and can lead to friction.
If this isn’t done quickly enough, other firms will try to poach your top talent who might feel insecure in their current position. This happened when GE Capital bought Heller Financial in 2001. By the time they announced who would stay; many of the key players had departed the company to rival Merrill Lynch and helped them to become a strong contender the next year.
#4. Don’t Wait
As soon as the deal is announced you should start the integration process. This requires you to have made ready the planning and preparations before the deal is closed. Yet you may have concerns over confidentiality and keeping the deal quiet. To help with this, create a clean team; a group of people who have signed a confidentiality agreement and other legal documents; these people can review data that would otherwise be at risk and can then help speed up the integration process.
#5. Decision Drumbeat
Too much bureaucracy and paperwork can distract you and your key leadership from the critical issues, sap energy and demoralise everyone involved. The most successful and efficient integrations have employed a Decision Management Office (DMO) and integration leaders to manage the flow of the process. The DMO will ensure that every decision is made by the right people, at the right time, with the most up-to-date and relevant information available.
#6. Integration Team Selection
The DMO needs a strong leader. The person selected must have the authority to make triage decisions when there are challenges during the process, while also coordinating taskforces and dictating the pace of the whole process. Ideally this person should be a rising star of the organisation and have the capability to spend 90% of their time on the integration.
#7. Commit To A Single Culture
Organisational culture is the single biggest factor when it comes to the failure of mergers and acquisitions. If you don’t commit early to a single corporate culture, then you won’t have an effective entity at the end of the process. It doesn’t matter whether you are adopting a hybrid of the two organisation’s cultures or just matching one – the decision needs to be made and behavioural training needs to take place so all staff are aligned.
#8. Win Staff Over
Successful integrations require that staff are on your side, yet mergers and acquisitions can make employees anxious. They should be informed of the deal early on and will need reassurance about what will happen after the deal has been completed. Selling the deal internally will help establish the desired cultural behaviours and improve the efficiency of the integration.
During this time, it is vital that you maintain a consistent message, yet always concentrate on the benefits and opportunities for your employees from the deal and its success.
#9. Maintain Momentum
While integration may take up significant attention, it is important that both businesses maintain their usual operations as well. Otherwise, while distracted by the integration, key clients could be disillusioned form bad service and business costs could rise – turning the deal into a potential flop.
#10. Build A Repeatable Model
After you have achieved integration, review the process. Evaluate every part of the process and discover opportunities for improvement, to make the next integration process faster and more cost efficient.
Create a better process for managing staff reactions and integration and you’ll find that your M&A will become a success.
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