Merger Integration: The Great Leadership Challenge

Imagine the usual turbulence and volatility of day-to-day business as you know it…then double or triple those complications by introducing an unknown:  the integration of two companies during a merger or acquisition.

Leadership is not easy in the best of times.  It is a Herculean task during a merger:  the ultimate transformation challenge AND it is taking place under tremendous scrutiny by investors, regulators and employees.

There are many essential leader traits that determine the success of this transformation:  resilience, trust, courage, clear communication, juggling short-term vs. long-term demands, reducing expenses, protecting revenue and, not least of all, motivating your team to make this new entity a successful one.  All of these ask the near-impossible of even the best leaders.

I’ve been through more than a dozen merger integrations, typically leading or on the post-merger integration team, so I have had first-hand experience observing leaders in high stress.  There are dozens of essentials, but here are my five overarching tips to be an exemplary leader during a merger:

1 – Communicate more and sooner – instead of under-communicate, or communicating late. In the absence of a story people make up their own…which is a huge distraction from business.  Create a roadmap and an easily understood destination.  Explain what to expect during this kind of significant journey and change, and how that story arc unfolds.  There will be discomfort and change!  You are establishing culture:  this is the time to stand tall and make meaningful declarations that answer everyone’s questions:
– 1. Who are we now?
– 2. Where are we going?
– 3. Why?
– 4. What’s in it for me?
And get others talking as well:  encourage meetings and conversations of all kinds, at all levels.

2 – Respect the people – it is PEOPLE who are doing the deal for you.  Showing them respect can be as simple as saying “thank you” and as complicated as smart handling of Reductions in Force – who stays and who goes is never easy, but is best handled with grace.  Be respectful.  Give people the tools they need to operate and act as ONE, keeping in mind cultural differences:  they need shared public folders, a united email address, the same benefit packages, even a current phone list, informed sources to ask questions of – all on day one.  Expect identity crises and be prepared to tend to them to keep your best people – I have been “x company” for 10 years and now I am suddenly “y company.”  THAT is a change to manage.

3 – Make the difficult decisions, quickly. Rip off the Band-Aid.  That is much better than dragging out the ambiguity.  Remember:  you want to develop leaders who can drive significant change and deliver sustainable growth and merger ROI.  Now is the time to model that.  91% of 2016’s technology deals didn’t generate their expected return on investment, closely followed by manufacturing deals (86%) and corporate mergers (75%).  (Deloitte, 2016).  Thoughtful speed matters.  Be courageous.

4 – Create an amazing Integration Team. A strong and savvy Decision Management Office is key to a smooth and fast integration…and they are in place the minute you announce the deal.  The old adage makes sense:  you can’t just make the deal, you have to make the deal work.  Your Integration Team must understand the Vision and be clear about execution demands.  It is essential they be given authority to make decisions and NOT be caught up in unnecessary bureaucracy.  This must include someone who is established as a leader and can dedicate all of his/her time to this role.

Some painful data on the importance of successful merger integration:  according to McKinsey & Company (July 2017), In the three years after the deal closes, companies that neglect the painstaking work of an integrated approach in large mergers see the sales growth of the combined company sink an average of seven percentage points… …Capturing all the growth benefits of a merger requires conscious management focus…

5 – Celebrate legitimate wins. With fanfare.  Let people know they have hitched their wagon to a winning company.  Even the small wins count…and people love a winner.  Showcase success in a united fashion and make sure it is inclusive.

There are so many stories of mergers gone wrong!

Commit to these five keys above, and you’ll be the strong leader to raise the bar and actually “make the deal work.”