Checklist: How to overcome roadblocks in a business merger
How do you successfully acquire, merge or buy out another company operating in the same professional space? Take care of culture.
How do you successfully acquire, merge or buy out another company operating in the same professional space?
The right answer is culture.
The manner in which the business merger takes place is cultural and merging will only be successful when a well-defined change management plan addresses this.
And there’s a trend: the challenges are the same whether the business merger is between companies of similar size or a smaller firm merging into a larger one.
It might make common sense to merge your accounting firm, insurance business or advisory practice. You want to grow, expand into new markets, build expertise and increase your revenue, but creating a new culture where performance isn’t compromised, will go a long way towards you achieving this business plan. Cultural issues define the very essence of a firm.
Employee engagement and commitment should be your priority. Too often the emphasis is on the financial implications of the merge and while it’s significant, culture and employee morale, if not addressed could be a costly oversight.
Culture is one of the heaviest roadblocks to effective business mergers. Bringing together large floors of professionals or office buildings of accountants, brokers, lawyers or consultants with their own personalities, titles, ambitions and behavioural traits can be fraught with problems.
You’d be surprised but murmurings of ‘we do it this way’ not only leads to anxiety, unrest and politics, but they can also create an ‘us versus them’ mentality. Worse, the clash of titles, billing ability or confused reporting lines may inevitably put a company in conflict with the merging business.
The road to merging with another company is long. Your growth and revenue plan will be compromised if partners, senior staff and long standing clients sense the merge is not to their benefit and leave.
The key to a successful merger is acknowledging the challenges and seeking third-party external advice. Very rarely can a successful merge occur in-house without the people with skills in change management.
Often overlooked when merging firms is the competitive affiliation. What you want to avoid is a situation where one business exhumes the other, creating a toxic environment or where one firm feels threatened and less-valued.
Change management must be handled with empathy. Remember staff resistance to change often lies in their fears around job security.
To ensure culture is on top of the change management agenda:
Identify potential areas of conflict
The human aspect of the merge is often forgotten because so much is at stake financially. But when companies join together, there may also be a conflict of interest when competing clients are absorbed into the newly formed company.
How this is addressed may come down the cultural fit of staff and which clients’ culture is strategically a better fit for the future of your organisation.
Assess leadership strengths and weaknesses
The danger of a merger often lies with the personalities of staff. Boardrooms and executive committees can be a hotbed of ego, power and rules. Culture isn’t what anybody says, it’s how leaders behave. Less senior staff can easily feel forgotten about when the company they work for merges with another.
Leaders need to remember their role in the merger: to lead and to lead with compassion, empathy and transparency.
Develop open, honest communication that engages all tiers of the organisation
During a merger, employees may understand that change is inevitable but they may not know the nature of the change. There’s no such thing as over-communication in a M&A. Leaders need to simplify complexities, provide certainty to uncertainty and clear up ambiguities.
Frequent updates and check-ins about changes will provide clarity and assurance to staff about role expectations and job security.
Re-consider the office layout
Don’t underestimate the geographical placement of new departments and employees in a business merger. Revising the office layout so new teams joining from different firms are physically integrated and not separated by floors or office buildings will go a long way to successfully uniting teams.
Conduct cultural due diligence to identify possible conflicts between the two companies
Culture work must be part of the integration strategy the moment discussions take place. Look at what each organisation values, their decision making processes, behavioural norms and how workplace flexibility is treated. They’re often good cultural indicators to work with.
