If a Merger and Acquisition (M&A) relationship is not going to produce value, it is not worth the enormous effort and expenditure of resources it will require. As soon as an M&A is announced, the culture of both entities begins to change as people start to think about, and behave towards, their immediate environment in a different way. The fear of change, the unknown, worrying about their positions, redundancies, changes in reporting structure or responsibilities and a number of other factors becomes the driving force shaping culture. Have you been there before?
Blending disparate organizations and people effectively is very hard to do, and few do it adequately (much less well). It’s hard enough to get human beings to build decent relationships in personal life. But it is doubly hard within and between organizations, especially since those relationships are expected to produce value.
M&A is one of the biggest sources of relationship problems in business, both in the relationships it creates and the relationship it destroys. As we consider what it means to “commit to the relationships,” we’ll dig into what makes these difficult situations work –or not.
The work of every organization relies heavily on relationship- relationship with other organizations (joint venture partners, manufacturers, distributors, vendors, and suppliers) or with others inside our organizations (project teams, problem-solving teams, creative teams, interdepartmental or inter-business-unit collaboration and normal daily work-flow interactions).
In an organizational setting, leaders need to make strong effective relationships a high priority. Committed relationships lead to high performance because new ideas emerge wherever two or more skilled, passionate people are working together. They commit to the relationships and expect high performance to follow. In most M&As today, the commitment is to a shared interest (often a short-term interest), even at the expense of thousands of relationships.
Professional relationships depend upon two very high-level, make-it-or break-it factors:
- Compatibility of the two sets of expertise and assets
- Compatibility of cultures and people.
In my consulting with teams and on M&As, I’ve observed that the leaders always seem to consider only the blending of complementary skills, assets, talents, and competencies.
For a successful M&A to occur as a leader you need to focus on the right things:
1- How this new relationship will benefit the customers and clients. All too often during a merger, leaders fail to manage and promote the interests of customers and other key stake holders. It’s too easy to focus on the internal loose ends, distractions, disruptions, that are typical during M&A.
2- The second key element of successful M&A activity is the blending of cultures and people. Often, leaders lack of “due diligence” in regards to assets and competencies pales in comparison with their lack of consideration about culture and people. “Of course we’ll all work together and get along” they say. “Why wouldn’t we?”This is a fatal illusion
Organizations mired in unproductive activity, complaining, and turf battles strongly indicate an absence of powerful reasons to collaborate. Nature abhors a vacuum. If nothing valuable fills the “space” between us, nonsense will inevitably pour in. It’s easy to become so focused on sorting out of all the cultural disconnections and challenges that the real goal is also lost: to maintain and enhance performance and productivity during the transition. Leaders know that there can be no breaks from excellence in serving the market.
Building a human venture that works well is a rare occurrence. The physical merger may make sense, but only if there has already been integration on less visible but more substantial ground. Think about building on intangible ground- shared vision, mission, values, and strategies- rather than only thinking of the tangible elements you can see and understand.
Have you gone through a merger or acquisition? What was the impact on the culture in your organization? Did one entity dominate and force their culture onto the other, or did a truly new culture emerge?