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Integrating Mergers and Acquisitions

There is one thing that will never change. There will always be change. The economy is in constant change, either growing or slowing. The world around us is evolving with new innovations that make our lives easier but different.

In the thriving economy America has experienced in the last decade, there have been corporate changes like no other time in history. Mergers, buyouts, and acquisitions have become commonplace. As this article is written, another mega-merger has been announced in the entertainment industry.

Like all growth, growth by merger and acquisition involves some pain. There are winners and losers. Companies purchase assets, market share, technologies, and innovations. However, companies seldom acquire empty buildings. There are people in those buildings. The people side of the acquisition is critical in achieving bottom-line success in a merger. The financial minds are important but the art of people integration can make the initial dream of the synergies of the combined organization a reality. Consideration of the following keys when integrating two organizations will contribute to the success of the merger.

Begin at the beginning. The best time to begin integration-related activities is at the initial thoughts of a merger. Integration activities should be built into due diligence. Prior to the acquisition tasks such as developing a communication strategy, selecting an integration manager, and exploring strengths and weaknesses can be performed.

Also, due diligence should identify the psychological contracts, or informal understandings between workers and employers that are just as important as written agreements. One of our clients found there was an implied no travel policy in the firm they were looking at. This posed a huge problem because of the desire to utilize the talent represented in the target firm throughout their geographically dispersed organization.

The merger may make sense on paper but if you begin integration efforts early you will have the opportunity to nix the deal if the most critical people issues are not workable.

Integration is a real job. Integration is an ongoing process and not simply a stage of the transaction. Someone needs to lead it. But, who is qualified? The business leader of the acquiring firm's authority position doesn't easily allow for facilitation of integration activities. The business leader from the acquired firm doesn't yet know enough about the acquiring company. The best candidate for this role is either a fast-rising star, for the more straightforward projects, or for more complicated situations a seasoned manager that fully knows the acquiring firm. Although it is necessary to match technical skills to the situation, interpersonal skills are key to the integration manager's success.

Culture - Work together, fast. The faster people from both companies begin to work together to solve real business problems the faster the integration will occur. Programs don't make integration occur, people do. With practical examples that allow people to exercise their skills, barriers are more easily overcome.

Make decisions fast. There is nothing more paralyzing than lingering decisions about structures, reporting relationships, key roles, and possible layoffs. One of the hardest things for a manager to learn is to communicate when all facets of the situation are unknown. It is OK to discuss probabilities. Respect emerges when employees know the managers are human and are trying to figure out the issues.

Don't be arrogant. The smaller, acquired company may have some great practices that should be adopted. Don't forget there were good reasons for purchasing the company. Having the new firm's employees work with the existing firm's employees at all levels allows these great ideas and best practices to emerge.

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Mergers are obviously just one form of change that a firm may experience. Considering the human aspects of change in all transitions is critical to real success.