Mergers are increasingly becoming popular around the world as businesses seek to achieve growth amid rising competition and challenging business environment. Combining two businesses often results in many new complexities that did not exist before. The new entity could end up with a presence in several markets, a larger and more diverse customer base, a more complex product and service portfolio, and a high level of people and operational complexity.
Mergers involve several key legal, human resources, tax, intellectual property and financial considerations. Despite their growing popularity worldwide, around 80% of mergers and acquisitions fail. In any merger, there are numerous challenges in integrating the two previous distinct businesses into one harmonious unit. Mergers are a delicate process, which can fail to achieve their objectives if not managed right.
Mergers call for bold leadership that is ready to make difficult decisions when called upon. They typically involve a substantial amount of due diligence by both parties. In any merger, there several key considerations you need to look into if you are to achieve a copacetic level of success in integrating the two organisations.
Bringing all customers to see one harmonised organisation is one of the key activities you will undertake during a merger. Immediately after a merger, customers will be keen to know what sets your company apart from competitors. During the first few years of any merger, it is advisable to stick to the key intrinsic strengths that brought you together. As the business grows and consumers become more familiar with your broader offerings, you can expand to new areas.
2. Quickly paint a picture of success to everyone
Here we are looking at all relevant stakeholders, including the boards of directors, customers, staff, shareholders, regulators and revenue authorities. Managing the expectations of the various stakeholders is a complex process that becomes even more complicated when you move across different jurisdictions. The sooner all your critical stakeholders are reassured of the goals and benefits of the merger, and you manage to meet all of their requirements, the easier the integration process becomes.
3. Culture of the organisation
Mergers are about equal partnerships based on equal footing. Among the first assignments is to decide what your adopted culture would be. Fusing two cultures might not work even though the two companies had very similar values and work cultures, there can be some nuances that mean you have to develop a new culture based on shared values of the brand, then allow it to naturally grow.
4. Have a story governance framework
It’s imperative to have a strong governance framework that is led by a sub-committee of the board and management steering committee that is mandated to manage the entire merger process. A strong special team typically referred to as an integrated management office is imperative for a merger to succeed.
5. Effective communication
Throughout the merger process, emphasise the importance of listening to shareholders, customers, staff the various regulators and establishing a two-way communication channel. Ensure you remain transparent to the stakeholders, especially shareholders, regulators, staff and customers. Remember, even when challenges do occur (as they often do in mergers), you must constantly engage your key stakeholders and reassure them of your commitment to the merger and to addressing any emerging service issues.