Insights

The Keys to Successful M&A Integration

The Keys to Successful M&A Integration

January 21, 2022Change Leadership, Organisational Change

Merger and acquisition activity is at record highs and remains a powerful and necessary pathway to growth, to enter new markets or to acquire new capabilities (ref: M&A Boom to Smash Records – AFR).

Whatever the true purpose of your merger or acquisition, it can yield significant benefits, albeit with a significant transition effort and some temporary disruption.

But even if the decision to do it is strategically sound, M&A initiatives typically succeed or fail during implementation.

The challenge

M&A integration is one of the most challenging organisational changes to plan and execute. It presents great risks and opportunities.

A flawed implementation risks incurring negative impacts such as:

  • Disruption to operations, sales and revenue performance
  • Impairment to workforce engagement, culture and performance
  • Loss of talent and corporate knowledge
  • Brand damage, in the eyes of both customer and talent
  • Failure to realise intended benefits.

These impacts could end up costing millions and even lead to irreparable long-term brand damage. Without even factoring in the potential benefits, the case for investing in getting it right is clear.

One of the most common causes of failure is a lack of effective change leadership demonstrated at the executive level.

Senior executives can find it challenging to balance the significant change effort required with their everyday operational roles. The leadership team will also face immense scrutiny from employees, customers, regulators, unions, the board and many other stakeholders as they execute.

However, if the executive team does not apply their time to communicating, engaging and supporting people through the transition process, well beyond the initial announcement, chaos is a more likely outcome than success.

The keys to success

Regardless of what else you do, if the executive team is not fully engaged, highly capable, aligned on objectives, visibly committed and actively engaging their people to lead the change, your M&A initiative will not succeed.

Preparing your leadership team is therefore one of the most critical steps. This may need to include collective leadership development interventions to bolster capability and get everyone on the same page before launching the program.

There are a variety of other key success drivers. Blue Seed’s experience shows that successful M&A integration requires:

  1. The formation of a highly-skilled initiative team, with adequate capacity and executive support: you need your best people on this and you may need outside support to build capability and capacity.
  2. Clarity of purpose, target outcomes and metrics that define success: there is no point having these written in a document no one reads either. Ensure leaders are highly conscious of the targets and that all actions support landing them.
  3. Confident, competent change leadership and governance at the executive level: executives must communicate with clarity and regularity, allowing everyone a chance to voice concerns or identify impacts to be managed. Leaders need healthy doses of conviction, urgency and optimism balanced with humility and empathy in respecting their peoples’ needs.
  4. Well-planned & executed stakeholder engagement: you need to quickly augment the guiding change coalition. Getting middle-managers up-to-speed and supporting the change should be an early priority. They possess a great depth of influence as they connect with your frontline daily.
  5. A compelling change narrative and communications plan that rapidly generates workforce understanding and support: even though your M&A program is a strategic priority it will still be competing for attention with a myriad of other projects, customers and operational issues. Every message must be absorbed and understood to lift awareness and support. And even if your messages are conveyed with great skill, you’ll need to repeat them across many channels and forums.
  6. Identifying and managing the impact on workforce culture and capability: these are two very powerful forces that influence outcomes. Ideally, you’ve thought through the impact to culture and peoples’ capability needs well in advance, so leadership, communication and learning activities target these.
  7. Going the extra mile to make sure all associated changes and benefits are fully engrained, long-term: planning launch announcements and executing changes associated with mergers tend to take the lions’ share of effort and focus. However, even when it feels like the integration process is complete there may be hidden issues and concerns that go unnoticed that can prevent changes from sticking. Have you checked all outcomes and metrics have been realised? Are mechanisms in place to make sure change sticks?
  8. Completion within the shortest possible time period: this is essential to limit business disruption, reduce implementation costs, reduce anxiety and uncertainty for employees and realise benefits sooner. However, it is common for executives to underestimate how long it can take.

Blue Seed has extensive experience guiding executive teams through complex, large-scale M&A integration programs.

Our expert consultants work with executive leaders to put the above elements in place. This creates confidence, peace of mind and a high degree of certainty that the program will succeed.

Contact us today for a free consultation.

 


By Huw Thomas  Principal Consultant, Head of Thought Leadership & Innovation