Seven Tips to Ensure Business Marriages Grow Happily Ever After
Joyce Harper is an online columnist for Sales & Marketing Management. She is also the founder/CEO of Sharper Solutions (www.sharpersol.com)—a management consulting firm specializing in organizational development and strategic management—and works with companies nationwide to create organizational effectiveness and increase revenue building potential.
Reprinted here is Harper’s article “Motivating Change: And The Two Became One”, in which she recommends careful consideration and compatible business goals to ensure a successful merger.
Recently I met with a client who was contemplating a horizontal merger with another organization. My client was approached by one of his competitors with a proposal aimed at broadening market share, maximizing economies of scale and increasing profits for both companies. As he took me into his confidence by discussing the preliminary details of the possible merger, I could see how this deal could turn the two average organizations into one industry leader. But for this—or any merger—to succeed, the leadership team would need to have a clear vision of the outcome and a strong management group to make it happen.
Approximately two out of every three mergers and acquisitions fail to achieve their intended goals or to live up to their financial promise. In fact, depending on the statistics used, the failed merger rate is higher than the U.S. divorce rate. Therefore, I always recommend that business leaders take the same care when considering a merger that they hopefully [would take] when considering marriage. Here are a few examples of things to consider when contemplating a merger.
1. It’s never too early to meet your potential in-laws.
Whenever possible, meet with the managers of the other organization, even if you are still in preliminary talks. The purpose of these meetings is not to divulge confidential information, but instead to begin building a relationship with the leaders who may become leaders in the new company. Are they strategic thinkers? Will they fit into the new culture of the combined organization? Do they have the ability to adjust quickly after the merger and begin refocusing on growing the new organization?
2. Your plan will fail if you fail to plan.
Develop an integration strategy for bringing the two organizations together. Include short and long term goals and objectives, as well as a plan for restructuring the organization. Outline the new roles and responsibilities and reporting lines for every level of the organization. Revise the financial controls, the policies and procedures and even the employee handbook, so that when the ink is dry on the legal documents, the new leadership team is ready to roll.
3. The truth is a powerful antidote for rumors.
As soon as it is legally feasible, announce the merger to employees. Chances are they have been whispering about it anyway, so put the rumors to rest with the full story. Promote the benefits of the merger and discuss how it will help the organization and all its employees in the long run. Then, announce it to existing customers. Outline what the change means to them and be upfront with any potentially negative consequences.
4. Adopt an attitude of intolerance.
As with any union, there will be conflict. Yet, in this environment, internal conflict could be toxic. Address it head on and deal with it severely. The early months of a newly merged organization can dictate the tone and culture of the organization for years to come. Managers must take a proactive approach to creating a healthy work environment and a positive work atmosphere.
5. Set your people free.
Once the merger is complete, empower the business building team to do [its] job. Generate press coverage of the merger so the sales team spends less time fielding questions and more time touting the additional benefits of doing business with your company. Structure the organization so the sales team has a clear line of authority in the event they need to get questions answered or to close a sale.
6. Never mind that your head’s in the clouds; keep your feet firmly planted on the ground.
From the onset, realistically assess what it will take to complete the merger. The cost of a merger includes human capital, financial expenditures and unanticipated costs. Be prepared, plan accordingly and actively seek expert advice and assistance.
7. Prepare to clean house.
Assemble an experienced “Clean Team” to guide the integration process. A Clean Team is a group of independent consultants who work together to gather, analyze and appraise confidential data for the purpose of integration planning. They work to identify potential problem areas and to help the two organizations smoothly integrate into one.
Mergers and acquisitions come with a great deal of risk. This risk can be minimized if the leadership team on either side takes the time necessary to engage in due diligence and strategically plan for the integration of the two organizations. When this is done right, the organization has the potential to become, and remain, a powerhouse within their industry. And, it can pave the way for more successful mergers and acquisitions in the future.
By Joyce Harper
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