Mergers & Acquisitions are on the rise. KPMG’s 2015 M&A Survey showed that 80% of respondents made at least one acquisition in 2014, and 82% said they expect to make at least one acquisition in 2015. Reasons range from “opportunistic” to “expanding customer base” to “defending against the competition.” Whatever the reason, in order for two companies to merge successfully, there needs to be a well-executed integration plan.
We’ve all read about the epic M&A failures. And perhaps lived through one or more of the smaller, not-so-epic failures. Often those failures are caused by inadequate planning around assimilating cultures, integrating processes and communicating openly and effectively with employees. Having a well-defined game plan is essential. Here are some tips.
Create a “transition team.” This should include members from both companies. Their charter is to identify similarities and differences between the two organizations in terms of cultures, processes, jobs, benefits, etc. Where there are differences, what will be best for the combined organization going forward? Where are there overlaps in jobs? How will that be handled? This team can serve as sort of a test case, or mini-merger to see what issues might come up in the larger integration.
Create a detailed integration plan. This entails more than a “welcome” meeting. What are the activities you will do over the first 90 – 120 days to integrate functions, processes, people? How will you roll out the “new company” to employees? What change management tools/activities will you employ? If there will be layoffs, how will you handle that and what will you do in terms of outplacement for departing employees? What new/revised policies and procedures are needed?
Create a comprehensive communication plan. Whether you are the acquirer or the acquired you owe it to your employees to share as much information as you can with them as early as you can. Closed doors and more frequent leadership team meetings do not go unnoticed. Nip fears and rumors in the bud by open, honest communication.
Conduct a “new company” orientation. Within the first 90 days, conduct an all-employee orientation meeting to communicate what the new company will look like, and give employees an opportunity to ask questions and air concerns. Follow this up with smaller team meetings led by managers. Set expectations for cultural norms, discuss any significant changes around jobs, profit sharing, compensation, performance reviews, processes, decision making, etc. Be open and honest about lessons learned so far in the integration process, and solicit feedback.
Although this takes time and effort in the midst of the many financial and logistical components of due diligence, doing a good job of integrating the culture and people components is essential to success.