River Currents

Achieving the Promise of Transformational M&A Integration

Posted by Peter Thies on Jul 19, 2016 10:46:47 AM
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Transformational M&A integration

Merger and acquisition deals have slowed a bit lately, yet there are several impending deals in the news; Aetna's acquisition of Humana, Danone and WhiteWave Foods, and Medivation opening its books to potential buyers. 

The goal of any M&A activity is to achieve the strategic and financial promise with sustained results. Yet most mergers fail to achieve their targeted value. 

Here are some reminders about what makes for M&A success—and failure.


M&As require hard decisions impacting people and the business. These decisions must be made quickly, courageously, and with discipline.

Yet many leaders are unprepared to lead the organizational transformation that most merger integration activity represents.

Often they are unaware of the negative impact of poor leadership during integration. The unintended consequences of poor leadership include stalled/retracted decisions, increased uncertainty, and paralysis fueled by ambiguity.

Success takes rigor, planning and a functioning timeline with tangible milestones and very clear changes in leadership behavior. 

The Integration Killers 

  • Culture Clashes: Unaddressed cultural gaps between the two businesses cause turmoil.
  • Tunnel Vision: Focus on strategy, finance and legal—over culture, organization, and leadership.
  • Conflicting Egos: Unchecked pride of CEOs and senior executives negatively impact the integration.
  • Communications Vacuum: Delayed engagement of employees into the integration process and unclear organizational roles give opportunity to problematic messages and hearsay.

The 5 Leadership Actions 

  1. Clarifying and communicating the vision: People understand and accept the business case. A roadmap is in place and progress against the plan is known by everyone. 
  2. Designing a high performance organization: The transitional and NewCo organization structures are defined early on. The right leaders are in the right roles. Leadership teams are configured to motivate cross organizational teamwork. 
  3. Managing a high engagement integration process: Capable leaders engage work teams in a meaningful way on real integration work that yields both short-term and lasting successes. 
  4. Developing transformational leaders: A benchmark standard for NewCo leadership is created and people are developed to meet and exceed leadership expectations. 
  5. Creating an aligned culture: The culture of NewCo is defined by the leadership team, tied to the business case, and demonstrated by top leadership. 

Remember, there’s a difference between knowing about the pitfalls of M&A activity and being willing to take the actions needed to be successful.

I'll leave you with this link to an HBR article that looks at the critical questions to ask prior to pursuing a business combination.

 

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Topics: Transforming Organizations