What does your M&A project look like?

Greg DicksonPosted by Greg Dickson on February 22nd, 2010 | 0 Comments

Corporate mergers and acquisitions (M&A) are a fact of today’s business environment. Whether they are hostile takeovers, or synergistic partnerships, they represent a melding of technical, financial, and cultural entities designed to improve efficiencies, broaden market penetration, or eliminate competition. Unless the M&A goal is strictly to absorb another company’s client base, with no intention of retaining any other corporate asset, there will be some measure of assimilation required between the merging entities.

I have been peripherally involved in a number of M&A projects over the years, and I have observed one critical area relating to assimilation. Differences in corporate cultures are frequently overlooked. Brushing off cultural differences can have a negative impact from the very beginning of the M&A process as the core team, or teams, form. Underappreciating the cultural differences can have ramifications with regard to implementation time-lines and costs in ways that can be hard to measure in an analytical process.

The following example comes to mind: 

In 2009 a small, but very effective, family services nonprofit organization found itself in a seemingly insurmountable financial crisis. Tumbling stock value in the endowment, unparalleled state funding cuts, and decreases in private donations brought the organization to the brink of closing its doors.

Salvation came in the form of an M&A with a larger health organization in the area. The merger resulted in operational funding, administrative, and infrastructure support, while allowing the family services organization to continue to bring the community the high quality care it had been known for, for over one hundred years.

Everyone recognized this union as a true win/win for both organizations, and all attacked the logistics with vigor.

The brick walls began to appear when the transition teams got deep into the technical areas. One significant wall, which could not be breached, involved a software system consolidation. After working for six months to merge two systems, management came to the realization that they could not be effectively consolidated and a costly rollback was implemented.

The technical staff and transition teams were speaking a different language. Both were speaking English, yes, but language used (sometimes the exact same language) had very different meanings – meaning based on specifics within the organizations, their clients, and their processes. If these differences had been recognized early on, the decisions made would have been different; and six to eight months of wasted time, money, and energy would have been saved.

How could this situation have been avoided?

  • The merging organizations must recognize that there are differences that cannot be quantitatively identified, and be willing to take steps to learn what those differences are and how to deal with them.
  • Utilize a facilitator, either in-house or an external resource, who can help the parties move out of their comfort zones and expand their awareness of all available channels of communication.
  • Recognize the importance of flexibility in their communication approach, based upon their audience and the situation.
  • Be willing, and able, to confront issues promptly.
  • Be able to move any relationship from a state of conflict to one of compatibility.
  • Be able to put the “need to get results” and the “need for good work relationships” in balance, without sacrificing one for the benefit of the other.
  • Take an in-depth look at a real-time relationship and what may have caused it to derail – on both parties’ parts.
  • Implement what is learned – practice effective approaches that minimize the risk of derailment in the relationships, and maximize communication and collaboration.

It is hard for many in corporate America to get their arms around the importance of interpersonal skills, and how they affect the way we learn, process, and execute. Nevertheless, these skills, if cultivated, can lead to greater efficiency, and greater cost savings in most areas of business.

Image by mel.trainwrecks

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