In M&A (Merger & Acquisitions) projects, something new is formed out of two individual pieces. It looks so simple: Combine two top companies into a new one and everything goes much smoother. The cultural differences are often too great for everything to run immediately smoothly. After many months of strategic, financial, tax and legal reviews and numerous rounds of tough negotiations with the other side, the real operational work of post-merger integration is just beginning. But what do you have to watch out for when 1+1 is finally supposed to add up to 3 and not just 2 or, in the worst case, just 1.5?
Post-merger integration confronts companies with two major challenges
One of the biggest challenges is bringing individuals together and empowering the new entity’s teams to meet the ambitious expectations for commercial outcomes of a business transaction.
Employees of a company do not usually want drastic changes. A corporate transaction is a radical change and is decided at shareholder level; for employees, this is an exogenous event. Rejection, uncertainty and role ambiguity can be the result. If this situation lasts too long, the sustainable overall success of a business combination may be in danger, despite professional transaction implementation.
How can these challenges be mastered?
Team dynamics should be considered at the due diligence stage. This results in aspects such as: Where do we have duplications of personnel? Which individuals will conflict with each other based on their functional role and team dynamic profile? In this way, potential conflicts can be identified before they even arise.
As soon as the corporate transaction is signed and sealed, it is time to inform the workforce about the upcoming changes and to keep them constantly up to date. Once everyone is fully informed and the future tasks and work steps have been outlined, confidence in the upcoming project increases and fears disappear.
Every company has its own philosophy, established work processes and structures. In the case of a corporate transaction, two completely different corporate cultures usually come face to face and the question arises as to how they can be united. This can be mastered with a sound analysis of all teams at an early stage. Based on common values and goals and taking into account the different team dynamics, a new way of working together can be developed from which a new common culture can emerge.
The importance of proper preperation
Despite the great importance of M&A in the medium-sized business sector, it can be observed that significant potential remains untapped after the actual transaction when it comes to bringing people together. It is therefore important to prepare accordingly in advance and during the execution of a transaction and to actively and purposefully manage the integration process of employees and teams with a structured, measurable approach.
Data-based approaches support this: Team analysis can be used to identify the optimal internal role for each team member when merging and reorganizing teams. A 12-minute survey helps to find out what employees really need and how they can perform to their full potential within the new structures. Shared values lay the foundation for a new culture.
The change is analyzed with the help of various measurable key figures – What is going well? Where is there room for improvement? With a look at the company dashboard, these questions are quickly answered.
In this way, you ensure sustainable support both during the change process and afterwards. After all, post-merger integration is not a matter of self-propelling. Managers, HR staff or, at best, a neutral person in the form of an external consultant should accompany and coordinate the integration process. If the workforce is not supported here, companies will lose out on significant potential.