Insights

Merging into the unknown

What’s the best way to write a great integration plan? Give it to your teams, the people who will actually have to implement it.

Between 70% and 90% of mergers don’t add value for shareholders.

Staggering isn’t it?

I’ve been doing a lot of research into mergers and acquisitions lately and that’s one of the more horrifying figures I’ve turned up. In a global annual market worth 4.5 trillion US dollars, it seems like there’s a mass of failed opportunity!

M&As, and the big unknowns they present, have been on my mind recently because I’m currently going through something of an “arranged marriage” of my own. Well that’s what my counterpart (let’s name him Simon) and I call it. Our match-maker and boss (affectionately known as the Good Lord) put us together as we are similar sized companies, have comparable histories, a varied client base and services that complement each other. Now it’s down to Simon and I to “make it work”.

And that’s like staring a million miles into the deep, dark sky. I didn’t have a clue how to begin or where to go. A massive unknown.

Take a deep breath. Apply principles.

Even something like the dreaded integration plan might have been some help in knowing how to go about it, but I didn’t have one. So I decided I would go back to the basics. I would base my actions on the values of the Leadership Trust, and apply the principles we share with our clients. Grip self.

And I’ve gradually come to realise that this, in fact, may be the smartest way to go through a merger successfully.

M&As can too often have their genesis in a financial or market perspective. Financiers look at the extra value these two companies might deliver if brought together. They then study spreadsheets, streamline departments, combine services, reduce duplication, write up a plan, get paid once the deal is signed and leave before implementation has kicked off. But how much better it is when the organisations themselves meet and say “wouldn’t it be great if we worked together?”

Merge2

 

Culture and histories need mergers too

I wonder whether a key reason mergers have the fail rate they do is because no effort, consideration or budget is attached to merging the company cultures and their histories. An order from above to “Be friends! Share your tasks. Combine your coffee mugs!” just doesn’t work. Taking the human aspect into consideration is essential, and that means getting the ‘humans’ involved.

Simon and I, both being in the people development business, have decided to be different.

One of our success criteria is to grow our combined revenue. Where are we going to start? Well, with our people because they are the ones who are going to make it happen. They are our most precious resource.

This approach has one amazing advantage — the integration plan will be developed with everybody’s input, so not only will it be of better quality because of the varied and expert views involved, but it will come with intrinsic buy-in. The people implementing it will be the people who actually wrote it.

I love not knowing what that integration plan looks like. I’m confident because I know it will be better than one I might have written ahead of time. I have my end goal and a time frame. Now it’s time to play with my team and make it happen.

 

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