The Problem with Mergers …

Shutterstock 1730743618 medium


The problem with mergers and acquisitions is they often fail to deliver the intended value. Why do organisations merge? Why do big companies buy smaller companies? Well, there are many reasons but predominantly it is to access something you don’t currently have in your organisation be it market, capability or ... Culture.

Yet how many times in the post-merger phase do we see that very value systematically knocked out of the merged or acquired partner through imposition of parent governance, process and cultural dominance.

Managing organisational integration is a critical part of realising the value and benefit of any M&A activity. There are internal and external dimensions to this, especially if the merger involves the loss or change to a significant brand in the market.

So how do you define, manage and mitigate the risk of benefits realisation failure?

Shutterstock 1913075779

Firstly, you have to really understand and explore the current situation. Do you really know the underlying values and behaviours of both organisations? Do you understand that, for example, the power of disruptive thinking in one partner generated the very capability you seek in merging yet fail to recognise how applying your strict corporate governance risks destroying that disruptive climate?

So, spend the time actively and curiously enquiring about each other. Find out what makes the organisation, its people, its leaders tick ... on both sides.

How do you define, manage and mitigate the risk of benefits realisation failure?

Then, stage 2 ... come together with an open mind to generate the combined operating framework and value proposition. And don’t do this after the merger has gone through, do it as early as possible in the process. I know there are often extreme market sensitivities surrounding M&A that prevent these conversations taking place openly, but you have to explore and define in as wide a forum as possible. If nothing else, this ensures your senior leaders are aligned in terms of the challenges and opportunities as well as one combined vision and purpose.

Thirdly, as soon as it is possible to do so, take this message out into both businesses, engage openly and build the commitment to shared purpose and aligning of values whilst being absolutely clear on the value of difference.

Shutterstock 1112608511

Finally, and critically, don’t do all this once and forget about it. Organisational cultures have along lasting legacy that won’t disappear overnight. You need to carefully and sensitively manage the development of a new shared culture over time, and be prepared to put the effort into it.

Why am I bothering with this? Well, I’ve witnessed too many failures of merged cultures to stand by when I know we can help. We are working closely with our friends and partners at NU Creative to build an integrated M&A Catalyst that can support you pre, during and post M&A and provide a structured approach to managing and improving your value both internally and externally. I have only really mentioned the internal dimensions here, I leave it to our friends at NU to explore the critical part brand integration plays in effective M&A.

If this piques your interest, get in touch.

Back to insights