Five top tips for a successful merger
- Identify a clear purpose for the new business and have a clear and measurable idea of what success looks like
- Clearly identify the talent across the businesses and build the right team to take the business forward. This may well require an external assessment in the run up to doing a deal, and does certainly not mean just matching the workforce with the equity split
- Take on board the concerns and ambitions of employees
- Commit to regularly communicating with employees, and give clarity around the purpose of the business as well as the role that they play in supporting the merger
- Make sure that the new remuneration structure reflects the values of the new business
Leaders across the new business will have their own personal requirements and fears, as well as ambitions and aims that they expect to achieve in the new environment. It is important that they feel that these are heard and understood by the board.
Moreover, people throughout the company will be at varying stages of understanding about the process. Some within the business will be only just hearing the message, others will be resistant to the plans, and some may be struggling to understand their role within the new organisation.
There will also be a group that are fully supportive and excited about the possibilities of the new organisation. This means there can be no ‘one-size-fits all’ approach to engagement throughout the new business.
Business leaders are constantly faced with significant management challenges, often expected to work long hours and navigate a global network where team members are working across several time zones. It is up to the leadership team to create a sense of trust, purpose and transparency when working in this exciting but challenging environment.
Remuneration policies can add an additional stumbling block to company cohesion in a new organisation. It is likely that each business will have had differing remuneration structures in place, and failure to address this can cause issues not just at the leadership level, but throughout the entire business.
Build a sense of common identity through the new organisation and to create a high performing team. Failure to take these factors on board may lead to teams becoming dysfunctional and creating barriers to achieving the optimal business outcome, thereby reducing the success of the transaction.
Building the right team
Mergers are primarily driven by the bottom line, and so it is on this that much of the focus rests during the development of the new business strategy. But as the new entity is structured and the combined workforce is streamlined, there is a real risk that there will be a significant and unplanned outflow of talent and expertise.
It is imperative that the leadership team work hard to identify those employees that are best placed to help take the newly merged company forward and ensure that they are retained rather than be allowed to slip through the net.
When doing so, it is important to think not just about the short-term, but to also think about succession planning and who will be responsible for delivering business growth further down the line. Failure to do so will fundamentally undermine the long-term success of the business and stop the organisation fulfilling its potential.
Bringing together businesses with different cultures is often problematic, and in these circumstances, defining a common purpose for the new organisation is essential to driving it forward.
Clearly communicating this purpose to employees is equally important. Too often the communication around the strategy driving the merger is clouded by rhetoric and nonspecific language, with a frustrating lack of clarity about the benefits of the businesses coming together.
To maintain and improve business performance, the leadership team need to communicate regularly and clearly with all employees about the merger, as well as setting out how to measure its success very specifically. This communication often gets lost in transition, and the leaks are the only part people see.
A merger is an exciting time for a business, generating a wealth of opportunities for growth and innovation. But too often, these are squandered by a refusal to learn from history and properly address the importance of people.
The key to a successful merger is understanding the concerns and ambitions of employees, addressing them, then shaping the internal communication to ensure they feel trusted, heard, and valued. By putting people at the heart of the planning, the leadership team can go a long way to unlocking the true potential of the deal.
Mike Taylor is managing director at business performance and leadership consultancy Accelerating Experience
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