During a merger or acquisition, financial considerations take centre stage. Nothing is left to chance, with all the data being checked time and time again. Despite all this attention to detail, not every merger is successful. The reason why: people. AURIS Finance, a consultancy specialising in mergers and acquisitions, give you their advice.
Aligning the values, managerial practices and operating methods of two organisations during a merger is undoubtedly one of the most difficult and perilous tasks. According to a McKinsey study, around 60% of mergers fail due to talent management issues or poor team integration. The fact is that a merger is no easy task for existing employees. The creation of a new company resulting from the merger of two organisations will require the development of a new shared culture. This means leaving behind part of the previous company culture, which can evoke nostalgia among employees. In the case of an acquisition, the loss of identity of the acquired organisation can negatively impact team performance. Finally, adding a new subsidiary while maintaining separate entities can lead to conflict and feelings of injustice between the divisions.
Making way for communication
Uncertainty is the number one enemy of a successful merger. Rumours, unresolved issues and a lack of transparency can quickly undermine trust and lead to widespread departures. Transparent, regular, two-way communication is therefore essential. This involves explaining the reasons for the merger, sharing the vision and outlining the practical steps and their impact on the teams. In this case, it may be a good idea to call in an interim manager. They will be responsible for gathering feedback from employees and adjusting the integration process in real time.
Mapping out talent
In addition to the interim manager, setting up a governance structure dedicated to the merger, comprising members from the various entities, can facilitate constructive dialogue. This will give the acquired company a real sense of being included in the new project. To achieve this, it is important to identify strategic employees — the people with the necessary expertise, informal leaders, and technical experts who are difficult to replace. Accurate talent mapping enables appropriate retention plans to be developed, including financial incentives, career prospects, and recognition of each individual’s role in the new organisation.
A shared culture
Another pitfall is failing to establish a common culture. This risk is greatest when the corporate cultures of the two merging entities are similar. In this case, management may assume that the two entities will naturally come together. However, this is not necessarily the case and there is a real risk of fostering resentment between those who have been there longer and those who are new. It is therefore essential to take the time to listen to concerns, support employees and give them a voice. This involves setting up seminars and ensuring that leadership is available to answer questions and take a proactive approach.
Our experts at your service
A merger is disruptive for all employees. Their commitment to the joint business project is essential for the success of the merger or acquisition (M&A) operation. At AURIS Finance, our experts offer comprehensive support. Whatever your sector of activity, we are here to support you.
