• Tamar Balkin

Who Will Really Ensure Your Merger Is Successful?

In 2018 Australia hit a record for mergers and acquisitions (M&A) not seen since 2015 and there are projections that M&A will increase further in 2019. According to some experts, whilst the number of deals so far this year isn’t quite at the level of the past, the average deal size has increased. If my news feed is anything to go by things are not slowing down. Despite the propensity for mergers, much is written about the failure rate which varies from 50-70%. Recent research suggests that the integration stage of the entire merger and acquisition process was the most problematic area, and that the difficulties in the integration stage relate to the ‘human factor’. Whilst AI is advancing at a rapid rate, I believe there will always be a ‘human factor’ in the success of any business, especially within an organisation undergoing the significant upheaval associated with a merger, acquisition or sale. Those who work in organisations where there is a lot of change management may be familiar with the ADKAR change model:

  • Awareness of the need for change

  • Desire to engage and participate in the change

  • Knowledge on how to change

  • Ability to implement the change

  • Reinforcement to sustain the change

Typically, in a merger the hygiene factors are looked after, like the integration of systems and processes, finances, and legal, but all to often the complexity of the people management issues aren’t always addressed with the nuance and sensitivity that is essential for success. In any merger there will be uncertainty in terms of its success, acculturation, integration of key talent, layoffs, policy changes, and task reorganisation. All these factors can lead to low morale, amongst staff, leaders and key stakeholders. Disgruntled leadership at best slows things down and at worst causes expensive bottlenecks. Regular readers of my blog know I have a passion for the importance of leadership in business success. Effective leaders in a M & A or sale will harness the energy and expertise of their teams to achieve success, they maintain calm and focus in chaotic times. They remind their employees of the purpose of their work, the factors within their control. An effective leadership team will retain key staff, ensure business goals are met and ensure corporate values are embraced. In addition, they are able to spread excitement and positivity about the new direction for the business. Of course, in order to succeed the senior executive not only need to understand where the organisation is headed, embrace why the direction has been chosen but most importantly they must identify and acquire the skills and capabilities they each need to achieve these objectives. What concerns me is that with all the advice and finances that are put into a merger or sale, the critical role of the executive team is often overlooked. I have spent the last few months chatting to people in the M & A space and found that there are some critical times when the senior executive team and key influential leaders would benefit from bespoke executive coaching:

  1. When a company is preparing to be sold

  2. At the beginning of the integration process

  3. At the time of a demerger

If there are some key senior people who need to come to terms with organisational change and help you champion the new reality in your business please be in touch.

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