How to Ensure a Successful Merger
Mergers happen every day. It’s a fast way to add new value to an established company and strengthen its workforce. But reorganizations and mergers create a lot of issues on the way. The main one is a lack of alignment between the teams. Another is a lack of integration between the different systems the companies involved use, particularly if one company relies on legacy technology and the other develops state-of-the-art tech products.
In the worst-case scenario, the pitfalls of a merger will harm the whole organization. Often, a cultural misalignment can even block innovation. This is why all reorganizations should be approached with a detailed plan concerning teams and technology. This article aims to help you devise a said plan for the next merger you have in mind. We will cover a simple process and list things you should focus on to make the two companies fit perfectly.
Examine what you already have
Every company has its own data, systems, resources, and people. And no company is the same as the other. Make an audit of the resources both you and the acquired company possess. It will help you understand what’s a fit and what will have to change in order for you to collaborate effectively. Mistakes can still happen along the way, but by doing an audit first, you’ll know which things you should focus on first to drive meaningful results fast.
If the systems of both companies are similar or based on the same technology, it will be much easier to consolidate them. If not, you’ll have to learn what resources are needed to succeed in this operation. Sometimes, you’ll need expensive consultants to align the two systems manually. In other cases, automation will help you in achieving that goal quickly. When it comes to an international acquisition, remember to go through the legal aspects of transferring the data between countries. Extensive due diligence at this point will show if the merger is even worth it.
Consider weaknesses as well as strengths
Business owners wanting to sell their company will never focus on the weaknesses of their products. Act too quickly, and you won’t be able to uncover all risks involved. Many buyers don’t spend enough time interviewing the current staff. Instead, they look at data and reports that will never show the whole picture. To understand what has to improve and what can be a liability, strive for both internal and external outlooks of the business.
When researching the potential purchase, it’s essential to consult the current employees. Since they know the company throughout, they can tell you what should change and what gives the company the edge over its competitors. Leverage online surveys if you don’t have enough resources to talk with employees. A simple questionnaire will grant you insights you can’t find anywhere else as long as the people you reach out to are not afraid of losing their jobs. Communicate often and be open about what the merger will mean for them - and how it will impact their careers.
Investigate the organization’s inner workings
A business can look fantastic from the outside, but sometimes companies grow in spite of inefficiencies inside. Look closely at the reporting structure. Learn what key things they measure and what types of data they gather. Examine the company culture and attrition rates to see if employees appreciate their environment. High attrition can be an important warning signal that something’s off. An engaged workforce open to sharing their thoughts and ideas will surely bring you more advantages.
It’s crucial to have a good understanding of what has to change before acquisition to turn it into a success. Once you know how the company functions, you’ll be able to create a hypothesis on necessary improvements, weigh their impact on both companies, and determine the low-hanging fruit. To avoid confusion and fear among the employees, make them feel included at the earliest possible stage by creating a plan for the cultural evolution that will bring the two companies closer together.
Stay engaged to connect the two worlds
This phase is the most difficult one to get right. After doing the groundwork, you must now let your teams proceed with the devised plan. At the same time, you can’t just wish for them to sail smoothly, as there will most definitely be factors you didn’t take into consideration. When encountering an unforeseen issue, look to solve problems as soon as they arise - and use new knowledge to revise your assumptions.
Be proactive and support your teams in adapting. Not one person in either company knows as much about both organizations as you, maybe with an exemption of your closest aides and the consultants who supported you during previous stages. Consequently, even the most brilliant strategy and well-prepared documents will never substitute your continuous engagement and guidance.
On the other hand, you can’t do everything by yourself. Appoint the transition leaders, who will report directly to you. Pick great communicators who are open to change and have attention to detail. Share your knowledge and the insights you gathered with them. Tell them about possible risks and designate focus areas for each. Whenever a new issue arises, make sure they can contact you directly to consult their ideas on how to solve it. Your trusted advisors will ensure the synergy between the two recently united worlds.
Work, learn, and adjust
Nothing works perfectly on the first try. You can prepare for months, and unexpected situations will happen anyway. Especially if you just merged two companies with different cultures and systems. Never cease to look at what works well and what doesn’t meet your expectations.
Make sure the companies are aligned and open to communication. Mix the teams to build relationships. Strive to create an environment where people report issues, debate ideas, and implement the best solutions together. Make it clear that everyone works towards the same goal, and you can only be successful together.
By working together, you will discover areas for improvement on both sides. Look for things that work better in the acquired company and consider if their approach will work in your mature organization. A lot of times, even if you can simply adopt their way of doing things, you can still learn from it.
Assess the results
Meticulously assess the results every few months. Determine what’s going well and what has to be improved. Identify top issues and implement solutions to eliminate them. Look for quick wins that will yield results. Give the acquired company a chance to prove its value as soon as possible. Collaborate with the team to learn how to make it profitable quickly, but be patient. Often some time is needed for positive results to come.
A detailed assessment of the progress will show which areas require refinement. It will help you to identify issues and implement solutions that yield results. To gain value from a merger, you must make informed decisions and keep everyone engaged.
The first acquisition will teach you a lot about the whole process. Learn from the results and use this experience in future mergers. But remember that every purchase is different, and you can’t be certain the next one will be easier. The only way to ensure the process will go smoothly is by working with trusted advisors who support you along the way.