Photo | Courtesy of Bowditch & Dewey
Amy Morrissey is a partner at Bowditch & Dewey.
Updated: September 18, 2023
Know How
The secret for a successful merger
By Amy Morrissey
Mergers & acquisitions are common in business, as organizations seek to expand reach, increase market share, and achieve synergies.
But many mergers fail to deliver the expected results. Harvard Business Review reports between 70-90% of mergers and acquisitions fail due to a lack of integration strategy. The deal is not over when you sign all of the paperwork; it is over only when you successfully integrate the companies.
There are many ways to boost the odds of successful integrations.
1. Cultural alignment is a crucial aspect of an integration. Companies with distinct organizational cultures may have trouble agreeing on their values, new norms, and the best way to do business going forward. Businesses who have successful integrations are the ones proactively assessing cultural differences and developing strategies to foster collaboration and a shared vision. Communications, transparency, and inclusivity are key.
2. Leaders must be present. The CEO cannot merely hand off integration. Leaders must actively guide the process and be committed to the task. They must communicate a clear vision and establish realistic goals. To build trust and alleviate uncertainty, I find that regular town hall meetings are helpful. Open forums and other feedback mechanisms can help address concerns and provide updates.
3. Strategic planning can ensure the integration process aligns with overall business objectives. It involves creating a roadmap for integration, analyzing the strengths, weaknesses, opportunities, and threats for both companies. It identifies potential synergies, streamlines processes, and defines roles and responsibilities. Take strategy from both companies. After all, there was a reason for this merger. And make transitions slowly. I once helped two merging companies that offered different pay plans, where all executives had to go from a bonus every quarter to a bonus every year. The new company made the change over a two-year period.
4. Employees are companies’ main assets. Keep them informed and prioritize their engagement and retention. Not only should employee input be encouraged, but companies should reward workers for contributions to a smooth integration. Such recognition can go a long way to maintaining morale and motivation. Once I had a client who ignored that the company it acquired had an unlimited vacation policy. The client did not believe in such a policy and implemented its vacation policy by seniority, capped at 15 days. Turnover attributable to this was at an all-time high of 34%. The cost to replace those employees far exceeded what an interim policy would have required.
5. Don’t overlook the importance of maintaining a seamless customer experience. Disruptions or inconsistencies in service can aggravate clients and cause them to stop working with you. Organizations should proactively communicate with customers, ensuring they understand the benefits of the integration and addressing any concerns. They should also integrate customer databases, which ultimately will lead to better interactions.
Do not ever underestimate the importance of integration and do not think it is a fast or easy process. If you put a lot of work into it, you will definitely be rewarded with a merged company stronger than ever.
WBJ Web Partners
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