Delivering Successful Mergers & Acquisitions and The Pitfalls to Avoid

On April 21st, The Business Transformation Network held a VIP event on Mergers & Acquisitions which was attended by board level and senior management from some of the largest companies in the UK.

The below are some of the key takeaways and notes from the evenings' event which will give you an insight into the discussions points.

The topics of discussion were around:

1.     Department Mergers
2.     Harmonising Customer Offerings
3.     Centralising Processes and Policies
4.     Cultural Change, Integration and Communication

 
Department Mergers:

·       Why is there a need to merge two businesses? Is it for cross-selling, revenue generation, market share or to gain footprint in a country?
·       Some would say there are no mergers, only acquisitions
·       Are you communicating the reason for the merger/acquisition across the business?
·       Even when started as a merger, this can soon turn into an acquisition
·       Senior leaders need to be visible throughout the Merger/Acquisition, not delegating it out
·       Where does the accountability lie? With the Financial Director or Programme Manager? It should be with the CEO as they are the sponsor.
·       People will be wondering what is going to happen to their job / bonus etc – if you let it get to rumours, people will end up leaving.
·       How do you deal with the rumour mill? People will appreciate it more if you give them credit that they can handle the truth.
·       There is a need to have a strong communications plan – communication is a different skill-set than HR
·       Ambiguity is the killer, it is all about communication. Avoiding this is not an option when going through the process.
·       You need to understand technology, it is just not acceptable in this day and age not to, you wouldn’t have a CEO that didn’t understand the finance aspect

Harmonising Customer Offerings:

·       Customers – do they come last? This shouldn't be the case when they are the ones paying the money
·       Whilst change is going on, business as usual performance still needs to be excellent
·       In advertising, customers really care if you are getting bought out, so this is when the marketing/communication teams need to be knowledgable of the end-to-end process
·       There is a need to get regular feedback from customers, on whether it would be a good idea or not, and find this out prior to you making an M&A decision
·       Harmonising customer offerings is difficult to do internationally – often there is only concentration on minimum standards
·       Cross-selling as a benefit of a merger – does this actually work?
·       How do you know if it is a good deal? How do you measure success of M&A?
·       A lot of businesses buy out not for their product but to close down the competition
·       Be CLEAR about what you want and why you are doing it

Centralising Processes and Policies:

·       How do you merge international standards? – It simply can’t be one size fits all
·       “If you think safety is expensive, try having an accident!”
·       Russia, Germany, Canada – can’t have data in the Cloud! Local laws of the land mean homogenising is too difficult.
·       Ensure you know again why you are doing the acquisition – to achieve synergy? Often not. It is to have different ideas, different strategies, insights, and customers. Don’t suck them in! But be sure that you don’t change your mind – either separate or don’t.
·       Group CIO may say service is king, however a CIO in NY may say brand is king – yet they are in the same company. Others will say CASH is king – there is potential for high turnover of high level of seniors due to that debate.
·       Best board directors should be able to hold two opposing ideas in mind and act on both of them. There is a big difference between co-existing and conflicting.
·       Focus needs to be on value proposition itself; you can find the right compromise.
 

Cultural Change, Integration and Communication:

·       Make sure there is cultural chemistry between all the execs and lower level employees. You can do this with chemistry meetings. Make sure this is at the front-end of your decisions, not an after-thought.
·       Ensure that you share explicitly the differences in your culture and languages
·       Some businesses never go through this cultural appreciation from the get go which causes problems
·       The one thing that stands between successful business deals is the people themselves
·       Framework has to be flexible but maintain corporate standards. (In some industries this isn’t possible e.g. airline industry)
·       How do you get cultural insights to change presentation for various cultures?
·       Understanding political situation in the country right now and regulations
·       You can put numbers against customer experience, retention, performance but can’t really measure culture, so does it matter?
·       Culture eats strategy, but only if you can’t get them aligned!
·       “A man convinced against his will is of the same opinion still”

Takeaways:

·       Honesty and communication is key – HR isn’t solely responsible, share explicitly your reasons for a merger, why are you doing an acquisition?
·       Implement chemistry sessions before the acquisition and engage leaders but more importantly after the communication is key, making them visible
·       Talent – implement a new structure from the start. Make sure you are having these conversations from the beginning.
·       Technology - as a board member it is not acceptable not to speak the language of tech just like it isn’t in finance
·       Honesty and Communications – share explicitly why you are doing M&A, and ensure you communicate this to the top talent – you don’t want to be losing people due to the wrong communication
·       Ensure the harmonisation of your customer offering is at the forefront, have to make more money but how can you make more money if not through the customer.
·       How do you keep the board but all of the employees engaged and communicated with? Chemistry prior to day 1 / signing the deal and ensure this is done consistently through 2-3-5 year process
·       Honesty in why this is being done will shape all what comes along – simple clarity
·       Transformation teams are responsible for delivering change, but the ops teams e.g. finance, and the CEO, it is their responsibility to ensure this happens on a day to day basis
·       Remember that all of this is new to the teams and business, although it isn’t to the board

We hope everyone who attended took something away from the event and look forward to your attendance at the next BTN event.

Our next event will be on 'Delivering Customer Centric Continuous Improvement'.

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