Mergers and Acquisitions (M & A)

Introduction

M & As are a way of dealing with turbulent world, ie
"...The acquisition of the solution to some perceived change challenge. Instead of creating something new (a product, a marketing approach, technology, etc) by a revised strategy, trying to jump into the digital future in a big way, restructuring, with cultural renewal, a purchase or merge with an entity that already has what they think they need to better compete or better to fulfil their mission..."
John Kotter et al, 2021

During the last 3 decades, the value of M & A deals has grown 4 fold.
"...the logic of M & A rests on the belief that the value of the merged organisation will be greater than the sum of the parts..."
John Kotter et al, 2021

M & A can reduce the time needed to introduce something new or change what you are doing; time is an important competitive issue.

Despite this, most M & As do OK, especially those involving big tech.

Yet most do not gain all the synergies that justified the deals in the first place.

Cultural integration

One of the big challenges with M & As is cultural integration; there are 2 types:

i) using a general checklist of tasks & processes (usually a small group drives the M & A who tend not to communicate enough with other stakeholders being impacted
"...To speed up what can take a long time, and to keep people from 'worrying' or organising to fight decisions, little is communicated about what employees should expect in terms of timelines, implications of various roles and the like..."
John Kotter et al, 2021

This lack of communications does not encourage buy-in by relevant stakeholders (buy-in is one of the key ingredients for successful change); as people are kept in the dark, they see the M & A as a threat and will react accordingly.

M & A impact can be
"... New organisation structure: your job could be missing......what you have worked with successfully for a decade could be shifted or eliminated, making it impossible for a while at least to do your job at your expected standard. New budget and budgeting process: key projects could be cut and tatical knowledge of how to play the budgeting game may be no longer valid. New IT system: potential horrors are unspeakable..."
John Kotter et al, 2021)

ii) cultural (related to human nature; need to understand the different stages of organisational maturity, eg bureaucratic vs autonomy, formal vs informal, young vs old (generational, organisational, etc), traditional vs dynamic, innovative vs status quo, etc; it is easier to integrate core management elements like structures, systems, jobs, policies, processes, etc; much harder to integrate the cultures and people; cultural aspects of the integration need to start from day one:
"...if the risks seen economically acceptable, start planning for the cultural integration immediately and launch it on day one alongside other integration activities..."
John Kotter et al, 2021

Need to develop new mindsets with M & A)

Summary - The Challenge of M & A Integration (realised value is always less than expected value)

The best way to handle challenges of M & A is to get buy-in (ownership) by the relevant stakeholders impacted by the M & A so that it becomes their M & A, not just the consultants', senior management's, etc M & A
"...merger to be led by people, not managed and controlled by others above them..."
John Kotter et al, 2021

This is best done by

- developing a vision of future

- describing what success will look like

- using diverse teams that have specific focuses

- maximising communications, ie dialogues

- remove obstacles to success (including people)

- building a sense of community

- encouraging mindset changes like innovation, challenging the status quo, 'thinking outside the box', thinking differently

- encouraging collaboration and cooperation, ie working together

- developing appropriate training

- celebrating successes, wins, reaching milestones, etc.