There are several specific places where companies routinely stub their toes when making acquisitions. Get them right instead — and your prospects will soar.
1. People
Acquisitions rise and fall on the quality and dedication of the people called upon to carry them out. For this reason, successful acquirers begin to address their people issues almost immediately upon identifying a target.
Start with your executive leadership team. Determine the composition of the new management team as far ahead of time as possible. Once those decisions are made and the leaders secured, then junior managers can be appointed. This helps communicate internally that the integration process is beginning to unfold smoothly and sensibly.
Then identify those individuals (and occasionally teams) that are outside the leadership realm, but still essential to retain. They can be high producers, key coders or designers, or wizards on the production floor, for example. Develop specific strategies to keep them engaged.
One often-overlooked aspect of the integration process is middle management. Attention is given to people at the top and key people in product or sales positions, but it is the managers in the middle that will bear the brunt of executing all the changes. You must involve middle managers and equip them with the answers and the skills to discuss issues openly with their teams in order to keep rumors and anxiety from running rampant. And pay particularly close attention to incorporating the input of the acquired company’s managers.
Be proactive and make opportunities. If your strategic intent calls for headcount reductions, do not rely on “natural attrition;” that is just abdication in the name of kindheartedness. Similarly even if reductions are not a big part of your plan, people expect them so use the acquisition as a time to do a little constructive pruning.
2. Customers
Attention to customers should seem like an obvious concern at any time but it is particularly true during periods of change and uncertainty. Because acquisitions are times of great internally-focused thinking and activity, outward focus on customers can get lost in the shuffle.
Competitors will seize any open door into a customer and corporate upheaval is just one such door. They will spread misinformation and regale your key accounts with the dangers of your acquisition and the glory of their own wares. Do not let that happen.
Be proactive and convincing. Take the show on the road. Bring out the CEO or other big guns for your best customers. Walk them through what you are doing, if and how it will benefit them and state clearly what they should do if they have any questions or concerns through the process. And give salespeople a clear language about what they can (and cannot) say to customers.
Keep customers informed and make sure to spend time listening to their concerns. This might even be a good time to probe what they like and don’t like about the relationship or the solutions you offer. If there is a weakness in their mind, better to open that door proactively with an eye towards solving it in the integration/transition process than let a competitor open the door with an eye toward leveraging it.
3. Culture
Culture is woven into the fabric of a company. That makes it difficult to see and even more difficult to change.
The list of deals that have famously failed because of mismatched cultures is epic. But perhaps the culture botch of all time occurred when Daimler Benz — the imperious aristocrats of German technical excellence — tried to merge with Chrysler — the hip-shooting cowboys of U.S. muscle cars. The result was a disaster.
So, the first and perhaps most important rule in dealing with culture in acquisition integration is to deal with culture. Do not downplay it as something that will work itself out. It won’t.
Here are some questions to ask:
▪How are decisions made within your company?
▪Is senior management dictatorial or consultative?
▪Is innovation a catchy tag line or a true religion? (Ditto collaboration.)
▪Is success seen as a team effort or the result of a few star performers?
▪What drives the company's technology investments?
▪Is the selling process consultative solutions or order taking?
The second rule in merging cultures is to Know Thyself. It is not possible to integrate two cultures based on an understanding of only one of them. This is a step that you can take well before the demands of a deal start pressing in on you.
4. Communication
In corporate acquisitions, good communication is by far the simplest and cheapest way of reducing uncertainty and stress, two of the biggest causes of dysfunctional deals.
Good communication can:
▪Ease or shorten the inevitable periods of reduced productivity
▪Build trust with stakeholders
▪Prevent the loss of key staff and valued customers
▪Clarify objectives and unify focus
▪Ensure preparedness for expected changes
▪Preempt or deflate competitive rumors and disinformation
Start by being simple and direct about the rationale behind the deal. Don’t assume that its logic and benefits are self-evident to employees, customers, or others.
To the greatest extent possible have clear and concise answers to the one question that will be on everyone’s mind: “All that sounds fine — but how will it affect me?”
Some hints and guidelines:
▪Be open and transparent. Share more than you are comfortable sharing.
▪Communicate how the integration will impact jobs, benefits, reporting.
▪Tailor consistent communications to different audiences.
▪If there is no news to report, report that there is no news.
▪Make full use of every information channel that your stakeholders use.
▪Manage expectations and mood. Listen for concerns.
▪“I don’t know but I’ll find out” is always a better than just winging it.
▪Identify and engage staffers who exert positive influence over others.
▪Do not bury bad news.
▪Do what you say you will do.
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