Post Acquisition Integration
After the merger or acquisition, the hard work starts — getting two groups to work cooperatively together. When things go badly, smart CEOs call someone like Christine Grimm, who specializes in handling the most difficult client situations. Fully 70% of mergers and acquisitions fail to deliver value, often because of a mis-match between cultures. Chris tells us how to do it right.
Why do so many mergers and acquisitions go wrong?
First, during the “due diligence” phase, people are either overly guarded or have an incentive to believe the deal ought to work. So people are often either overly suspicious, or overly hopeful.
Also, there are lots of ways people can feel threatened because of the potentially sweeping changes that may happen. When people feel threatened, they can start to hoard information or may optimize things for themselves not for the firm.
What can we do during due diligence to make the deal better? One is, ensure your bankers and others evaluating the deal are people who have good people skills. This can help build positive relationships and build trust even before the deal is completed.
Once the deal is done, Chris recommends that you take the following 7 Steps within the first 100 days of the acquisition.
Step One – Create a Joint Integration Team
Create a Joint Integration Team that includes people from both organizations. Include key people from both sides. Do this even if the teams are geographically dispersed. Staff it with at least one or two people with training or skill on team process and how to moderate meetings. Sometimes an outside expert can help facilitate because of their perceived dispassion, or to free up the key people to fully participate in the meeting.
Step Two – Create Shared Values
Often the seeming alignment of the two parties, that looked so good during the courtship phase, turn out not to be all that aligned. Whether it’s values, culture, products or services, you have to re-examine the level of alignment. Be willing to have a fresh conversation about values and strategy. Start with a commercial “values assessment” where people are invited to share what is important to them (that’s what values are) and you’ll soon see what motivates people and groups.
For example, suppose a firm with a formal quality process were to acquire another firm with no formal quality process. The assessment would both identify the areas of non-alignment, and would give everyone the language and tools to have a further conversation about the values.
The conversation about values is good because it (a) builds relationships, (b) makes disagreements explicit, and (c) helps them craft a shared set of values. You may not need to re-write the firm’s mission and values statements, however they should be taught them and be invited to challenge and understand them.
Step Three – Force the new Integrated Management Team to do Strategic Planning Together using a Formal Process
The new leadership group will need to execute together, which means they need to have a shared ownership of the strategic plan. Forcing them to work together on something important will create bonding. And, it will clarify how that plan turns into actions.
The value of the Formal Process is several-fold. It conveys the importance of the activity. It clarifies expectations and deadlines. It levels the playing field in terms of the rules of engagement, of how to work together.
Step Four – People need to Feel Control and Purpose
Give people meaningful work as soon as possible. The formal process of step 3 will help create this.
Step Five – Mining for Conflict
The conflict will be there – you just need to pull it into the open and deal with it constructively. A formal team process with a good moderator can surface the disagreements in a way that is safe for everyone.
Step Six – Hold 1:1 Meetings with Top Managers Weekly for 100 Days
Be extremely careful to avoid anything like reprisals or blame. Use a technique like “Plus-Delta” conversations, where you acknowledge what is working well – the “plus” – and also identify what we want to change as we move forward – the “delta.” Don’t talk about what’s “wrong” or “broken.” Focus on problem solving.
Step Seven – Recreate the Metrics of Success
Wipe out the old ways of measuring success. These were built in the old reality from before the acquisition. Now that people are working on a revised plan in a revised structure, we should assume that Key Performance Indicators (KPIs) probably need to change also.