by Lina Martinez
One of the biggest purchases you can commit to, as an individual, is to buy your home. As the prices on the property market have been steadily increasing, most first-time homeowners tend to be in their 30s when they are ready to commit to the financial, legal and strategic responsibilities of homeownership.
But, when you translate the same process into the business world, acquiring a building or a set of offices is not the most significant investment you can make. Indeed, companies that are successful and value their stability turn their financial interest in a different direction. Instead of buying a building, it’s an entire business that they choose to acquire. Merging and acquiring is a complex strategic, financial and legal process that refers to the acquisition and the joint of a company. From the perspective of the company that’s buying, it’s a sign of financial strength. However, you need to be aware of the challenges that can put your business at risk when you decide to join forces with the recently purchased firm.
Plan a merger that works for all employees
You need to create a post-merger culture
In business like in marriage, the happy union is the union that combines the strengths of both partners to create something better that transcends them both. At the heart of a successful merge, there’s the creation of an identity that encompasses everything each individual company stands for – or used to stand for. The new entity you need to create to join visions and missions of each company is your new company culture. Google, for instance, relies on a powerful ethos. In 2004, the motto was ‘Don’t be evil.’ But it was updated in 2015 for ‘Do the right thing.’ The underlying meaning is that Google introduces itself and its employees as a force for good. Similarly, your culture needs to provide the guidance your team needs to represent the company. With the guidance, of course, you need to make it worth their while. Would Google employees do the right thing is they worked in dull and hectic offices? The answer is that they probably wouldn’t.
Plan ahead to be compatible in all processes
How do you best plan a merge? In the ideal world, every company would be compatible with others. You could just join them together as you do with two Lego pieces. But in reality, it’s more like trying to make two pieces of otherwise different jigsaws connect. It just doesn't work. You need to plan ahead to smooth out the obstacles. Your first issue will be to ensure that your IT system can talk to the system in place in the acquired business without causing major disruption. That’s is precisely why it’s crucial to design an IT strategy roadmap to bring everyone onboard. From accessing customer data to managing day-to-day tasks, you have to consider issues of accessibility, storage – you are going to work with a large volume of data post-merger –, usability – can the other team use your technology? – and operational processes.
1 in 8 employees is made redundant
Did you know that, on average, 12.5% of employees involved in a merge situation are made redundant? More often than not, employees are made redundant because the acquiring company doesn’t need them, such as a second receptionist in a small business, for instance. But other employees whose roles are misunderstood or understated can be asked to leave. Consequently, many employees are desperate to make a positive impression on their new employer from day one. Some make themselves indispensable by multiplying their involvement in projects. Others prefer to bring new and popular skills. But ultimately, while people try to save their jobs, the team morale can be dramatically low. If you are in the process of acquiring, you need to communicate early to all employees your views on redundancy. Doing this will ensure that those whose job is at risk have enough time to find new options.
When relocation is in question
Merging companies can lead to relocation, especially if you’re looking to introduce a new company culture. Starting in a brand new office can make sure that everyone feels equal. However, relocation comes at a price as not all employees are happy to change sites. Indeed, you need to offer adequate support if you don’t want to be faced with high turnover rates. Additionally, it’s essential to let all employees know as early as possible about your plan so that you can explore alternative solutions too.
The M&A process is designed to create growth and to approach new markets. But, if you fail to manage its consequences and how it affects everyday work, you can find your company worse off than it was before the merger.