Post M&A challenges TIPS FOR A SUCCESSFUL INTEGRATION

Post M&A challenges

TIPS FOR A SUCCESSFUL INTEGRATION

    In the first quarter of 2012 alone, USD 415.4bn worth of merger and acquisition (M&A) deals were announced worldwide and this number is set to rise. Organisations engage in merger and acquisition activities for a variety of reasons like strategic growth, access to new technologies or capabilities, or expanded geographical scope.
    However, research done by KPMG shows that over 80 per cent of mergers and acquisitions fail to produce significant benefits and about 50 per cent ultimately reduce the value of both companies involved.
    Numerous studies have shown that the largest obstacles to a successful post deal integration relate to human resource challenges such as loss of key talent or productivity, conflicts in management styles or cultures, and slow decision-making. On the whole, employees view the merger and acquisition integration process as a threat. Here are a few key areas to follow for a successful integration.
COMMUNICATE VISION, STRATEGY AND PLANS During the pre-deal due diligence process, companies spend a great deal of time, energy and effort understanding the value proposition of the target organisation and determining the synergy strategy of the ultimate ‘combined organisation’. However, once the deal is closed, organisations often neglect to effectively communicate the strategy. Employees of the acquired company need to understand that they will still continue to be valued. Employees of the acquiring company need to understand the reasoning behind the acquisition and how it will impact the current organisational strategy. It is better to communicate a ‘draft' plan, and ask for involvement and feedback, than to maintain silence on the integrated strategy.
IDENTIFY AND RETAIN KEY TALENT Regardless of the strategic justification of the acquisition, ultimately all acquisitions are about people! It is imperative for the acquiring company to quickly identify the key individuals required to sustain the value proposition. Focused communication and retention plans should be put in place for each of these individuals. This retention plan should not solely be based on monetary rewards; it should also include plans on growth opportunities, career path options, engagement and involvement.
ESTABLISH FORMAL INTEGRATION To ensure employees remain focused on their jobs, they need to understand how the integration impacts the management and organisational structure of the new combined organisation. To avoid organisational paralysis, it is vital to immediately communicate the new structure and any changes in reporting lines or approval levels. Even if the new structure is temporary or transitional, it is better to communicate the plan versus leaving the employees ‘wondering’.
TAKE ACTION With any integration, it is always assumed by everyone involved that some organisational changes that impact individual positions are inevitable. Fear of the unknown is always more disruptive to an organisation than dealing with the known. If there are known plans to integrate departments or consolidate roles or locations, these plans should be communicated as soon as possible. This will allow employees the time required to deal with the change and plan appropriately.
    To summarise, the key to any successful merger or acquisition integration strategy is to communicate, communicate, and then communicate some more.
    The author is VP- HR - India,
    Middle East & Africa for Emerson