Some hints: Strategy usually is not the problem; sometimes financial projections don’t include important considerations; and almost always it’s execution that falls short.
At the start of a current research project I’m working on [see below if you want to participate] I did the proverbial Google search on “reasons for M&A failure” to see if anything has changed recently. My search returned 1.84 million results in under half a second. When I narrowed the search to include only studies, articles and blog posts since 2015, Google returned a pared down 553 thousand results. In reading the major research and scanning the headlines of other entries, there were not new topics on this list.
When top executives are asked about lessons learned following a merger, acquisition or business sale, more often than not they say they would have invested much more energy and effort in communication, even when their deals were successful. Too often we see acquisitions or mergers not achieve full potential in a timely way owing to loss of key people, customer attrition and productivity downturn.
Absent (or less than effective) communication is almost always a factor when organisations experience these troubles whilst joining forces. In addition to investment in communication excellence to drive deal success, other interdependent investments include leadership capability and organisation culture.
Immediate prerequisites for effective merger communication include clarity of purpose and strategy, a shared view of the deal rationale and clear cultural expectations. These set the context for what business leaders and employees are asked to deliver and how they are expected to deliver it.
This post is by Jerome Parisse, originally published on the Walking the Talk website. It is one in a series that Jerome and I are putting together to introduce a unique Culture Masterclass for M&A Executives, developed jointly by Isely Associates International and Walking the Talk.
Senior executives and deal team members are best placed, but often under-prepared, to drive effective cultural outcomes.
Environmental cues for expected behaviour
Culture – “patterns of behavior encouraged or tolerated by people and systems over time” – is created from the messages people receive about what is valued in an organisation. And these messages come from three different channels: behaviours (what is role modeled, our actions), symbols (those small things that send a strong message, such as how a business spends time and budget), and systems and processes (anything from budgeting to performance management, measures of success, promotions and talent management). Decisions made send a message via one or several of those three channels. Continue reading
Make cultural diligence a priority to ensure that culture enables, rather than detracts from, merger success. These fundamentals, reinforced in content from earlier posts, are crucial in the strategy and early deal stages.
Start with culture capability
How do your executive and deal teams stack up on culture capability basics? If you can’t answer and emphatic “yes” to the following four questions work remains to be done.
- Can every team member articulate clearly your organisation’s business strategy?
- Can every member articulate clearly your deal rationale, strategy and approach, in the context of the business strategy?
- Is there at least one deal team member that can communicate effectively with the others about your own organisation’s culture – current situation and future desired culture?
- Does everyone on the team understand the effect organisation culture will have on business and deal outcomes?
It is important that deal team members know what to look out for culturally – ideally before any interactions between deal team members and a potential partner take place, Continue reading
In the heat of a deal, too many organisations leave culture to chance because they mistakenly think that they can’t (or shouldn’t) make decisions about it until a deal has been completed.
Certainly I’m not suggesting that every detail be carved in stone before close, but having a clear view about where you’re heading and what type of culture will support expected business and deal outcomes will both smooth and quicken post-merger integration.
When time is money, it pays to prepare.
What do we mean by “culture”?
Generically, many would say culture simply is “how we do things around here”. As described by my colleagues at Walking the Talk Pty Ltd, culture is “patterns of behaviour that are encouraged, discouraged and tolerated by people and systems, over time”. Continue reading
It may seem the obvious thing to do, but many organisations undertaking M&A do not effectively articulate and communicate the business case that underpins their decision to merge or acquire. Often this results in unexpected business and cultural outcomes.
Only by understanding overall business context and deal rationale is it possible to develop and execute a coherent culture strategy aligned to realizing value from a deal, as well as enabling future business outcomes for a combined organization. Continue reading
The most effective work on culture begins well before a deal is in full swing. With thoughtful preparation, a clear strategy and commitment to cultural alignment, organisations can improve their odds of achieving expected merger outcomes. Most organisations start thinking about culture in earnest after a deal is signed or closed. Others, only when people start leaving the business – especially when people they want to keep start leaving in droves. All too late. To improve the chances of merger success, it is critical to have culture on the table well before diligence begins. Continue reading