Merging or acquisitions of companies often occur when business want to expand into new markets, acquire new technology or reduce competition. While many of the physical integration aspects are typically covered in the process, Seugnet van den Berg, MD at consulting firm Bizmod says that more often than not, little time is spent on introducing the resources – understanding the skillsets and experience and ultimately making people feel at home.
“In an M&A situation, the longer it takes to integrate people, re-allocate and if necessary retrench, the longer it will take for a company to start realising their return on investment,” says van den Berg. “In addition the risk of losing key staff members increases if there is a feeling of insecurity.”
She warns that the merger or acquisition is not completed when the deal is done. “Often the integration is left to the business to sort out in a haphazard fashion.” Van den Berg suggests that this is an extremely vital process for the success of the M&A and needs to run as a project with a dedicated team assigned to oversee activities. “Significant time is spent on how to get people on to payroll, moving them into the new building and other logistical elements. While the merging of different corporate cultures is overlooked and the importance thereof misunderstood.”
“One has to have a clear view of the company culture on both sides so as to identify any common ground and more importantly, differences. How one does this, is in some cases more important than what one does – if your approach is aggressive, time-constrained and uncoordinated, it leaves the company being acquired with a specific experience and this experience will permeate future behaviours and ultimately negatively affect the culture.”
A structured project and change management effort in particular is a key success factor for implementation. She says that it cannot be the HR department’s or the new exco’s job. To do this is problematic for various reasons, not limited to the fact that time is of the essence and involving employees on the task team in day-to-day activities could make it impossible for them to focus on the myriad of tasks associated with implementing and integrating the different companies.
“The project team mandate should be driven from board level, concludes van den Berg. “The team needs a mandate to drive integration to achieve the reason for acquiring or merging. This allows for quick and principle-based decision-making and for rapid implementation.”