Making mergers and acquisitions work

The pre-deal due diligence for a merger or acquisition may be time-consuming, but the hard work comes after the contracts are signed.

I recently wrote about the high volume of mergers and acquisition (M&A) activity in the creative agency market (and got more business out of it). But what happens post-acquisition when things aren’t going quite to plan?

Remember, advisers get paid on completion of the deal, not what happens afterwards, so it’s down to the Board to ensure integration is a success.

If you’ve been through the process, you might recognise some of the following issues that can crop up. I’ve listed the ones I see most regularly and provided some suggested solutions.

·      Confusion about the direction of travel

If you work within a group structure, it probably won’t come as a surprise that the number one issue post-acquisition or merger is a lack of clarity about what the business is doing, where it’s going and how it will achieve its vision. It might seem obvious at Board and management level, but a lack of engagement means it’s often clear as mud further down.

The solution: Ensure the new shared vision, mission and values are communicated company-wide and that everyone knows their part in making the integration programme successful. This issue can be dealt with more quickly and simply than you might initially think with consistent communication and engagement.

·      Lack of co-operation

Struggling to motivate existing or new members of the team who aren’t keen on the change or don’t understand why it matters? Maybe naysayers are bringing the mood down and threatening the long-term viability of the deal?

The solution: This is a HR task and involves performance measurement reviews. As before, ensure everyone knows their role in achieving the new shared strategic purpose and incentivise cooperation. Regular rewards as progress takes place can revolutionise how people approach the integration challenge, instantly improving its chances of success.

·      Duplication of activity

Duplication of effort and/or costs is a natural result of bringing two or more businesses together, but it can get very expensive very quickly if it’s not dealt with immediately.

The solution: An early review of products, services and third-party suppliers should be implemented to build a matrix showing where efficiencies of scale can be applied. Apply the same approach to policies and processes so these can be aligned to the new strategic purpose too.

·      Competitive willy-waving

Leaders can have big personalities which sometimes creates tension when different agendas collide. This can lead to competitive willy-waving and a waste of time and energy while directors argue about what they believe to be the next steps or priorities.

The solution: If the strategic goals aren’t clear, that’s your first port of call. The Board must ensure these are agreed and then use them to sponsor and lead a company-wide integration programme. While agreeing on the vision should have been part of the due diligence process, this can get lost in the rush to sign the deal.

If needs be, employ conflict resolution processes – often, that’s where having good non-executive director support can come in valuable. Having someone objective and independent to bring a calm voice and expert view can change the dynamics in the room and mean things progress in a smoother way than before.