Back in January this year, several market experts forecast a rise in mergers and acquisitions (M&A) for 2024. Even though we’re just in April, we’re starting to see those forecasts slowly becoming a reality, with organisations like Nationwide (a UK building society), acquiring the online bank, Virgin Money.
Image: charlesdeluvio, unsplash
Mergers and acquisitions are used to help organisations to grow, transform, combine synergies or to reduce competition in the market. Ultimately, the benefits will be financial or operational and so should have a positive impact on the bottom line. Sometimes though, M&A don’t deliver the promised benefits and that’s most often due to organisations focusing more on the process and the commercial outcomes, rather than the people in both the organisations that are coming together. As a result, M&A can sometimes feel chaotic.
If you’re facing a situation where you’re bringing teams together, here are six things to help you focus on the people involved inside your organisation and keep any turmoil to a minimum:
1. There will be uncertainty – and that drives fear
In most M&A activity, there is often a level of confidentiality involved so you can’t tell everyone everything when you might want to. But, bearing that in mind, make sure you’re prepared to communicate well when the time’s right. Remember, the more information you can share, you’ll help to keep uncertainty and disruption down. So, be clear on why this change is happening (this is the most important element) and then follow with the how/when/who etc. You won’t have all the answers so be honest when you can’t respond but be very clear about when you expect to be able to share more.
2. Things take time – be honest
Ahead of bringing organisations or teams together, there will be a lot of planning but also a lot of assumptions made about how things will work in practice. But when a deal is finally done, turning the theory of creating something different into reality, will take a while. You’ll need to look in detail at how existing organisation structures work, pension agreements etc etc etc. Be honest about when you’re likely to know what this might look like (see point 1).
3. Theory v reality - people deal with change at different speeds
One of the most common things I’ve seen happen with both mergers and acquisition is the dawning realisation that day-to-day life will be different. People will leave (sometimes a CEO, COO or CPO) and this can be a big surprise to employees. Logically, you know you can’t have two people doing the same job, but the reality can feel very different when someone does actually go. Things are getting real. It can reinforce a feeling of ‘them and us’ if the ‘other’ organisation’s team stays in post and that can contribute to an overall feeling of uncertainty. Be as open as you can as early as you can in your communication about what’s going to change and what’s staying the same and keep people updated as you go.
4. Create dedicated communications about the change
As soon as the deal has gone through and the organisations have come together, set up regular briefings and communication channels that focus specifically on the change and make sure these are updated. Make it very clear that this is the place where people can find out what they need. Help managers by giving them regular briefing notes about progress - particularly for those teams where there may be bigger impacts as a result of what’s going on.
5. Be aware of culture clash
Sometimes, the corporate cultures of the potential partners can be very different. Think about a tech start-up for example, merging with an organisation that has employees from a more ‘blue-chip’ background… there will be all manner of issues arising that you may not have foreseen, and which can sabotage the benefits that you’re looking to achieve. An example of a merger where culture led to a financial loss was between HP and Compaq. On paper, you’d think that these two tech companies would have lots in common but apparently, HP’s consensus-driven engineering culture was a big mismatch with Compaq’s more sales-oriented, quick-decision approach.
Being clear on and communicating how the combined organisation is going to work right from the outset is key. Will this be a new organisation or will one organisation be absorbed into another? This is essential in defining how quickly you can support the development of the culture and help to avoid a clash.
6. Think ahead
Some people will leave (whatever steps you take) and that loss of experience, knowledge and potential could have a bigger impact than you anticipated. These material impacts of change can show up much later down the line – six to 12 months or even longer – and bearing this in mind is key.
I know that seeing into the future is not on any list of leadership competencies, but being as aware and prepared as possible can really pay dividends in this situation. That way, you can consider what might be needed to support your people as the outcomes of the M&A activity progress.
I often see congratulatory posts on LinkedIn for a job well done on a merger or acquisition, but that’s often in either process or financial terms. The real success will show up longer-term when the financial benefits are realised, and employee retention and engagement stats stay where you want them to be.
To get to that point, it’s worth reminding yourself daily that integrating companies (or even teams in the same organisation) can be tricky in practice. But, by putting people as a priority might make things a little smoother.
If you’re planning a merger or acquisition and would like supporting in helping your leaders prepare, or if you’re struggling with communications and engagement pre- and post-M&A, get in touch. I can help.