A very high percentage of mergers/acquisitions during the past ten years have fallen short of their goals. Some experts suggest the rate of failure exceeds ninety percent. The new companies that arose weren’t able to cut costs anywhere near what had been predicted, didn’t increase the quality of customer service/products, failed to enlarge mareket share, and lost many of their very best employees. Some so weakened their competitive positions that they, themselves, became acquisition targets. In the end, neither the shrefholders, customers or employees were winners.

A very high percentage of mergers/acquisitions during the past ten years have fallen far short of their goals. Some experts suggest the rate of failure exceeds ninety per cent. The new companies that arose weren’t able to cut costs anywhere near what had been predicted, didn’t increase the quality of customer service/products, failed to enlarge market share, and lost many of their very best employees. Some so weakened their competitive positions that they, themselves, became acquisition targets. In the end, neither the shareholders, customers or employees were winners.

Can we do better? Absolutely. Has anything been learned about how to manage mergers and acquisitions in the best interest of all the parties involved? Yes.

Some organizations have shown masterful management in accomplishing these transitions. The answer is surprisingly straightforward: For a merger/acquisition to achieve its initial cost reductions and profit targets and then sustain profits, manage costs, and establish a vital new corporate culture, management must decide in very specific and compelling terms what it wants the new company to be and engage employees at all levels in helping make the transition succeed. Too many mergers falter because top management is fuzzy about what it’s trying to accomplish.

In a merger, the new organization must be built from the ground up by creating a corporate vision/mission statement, organizational structures, sound business and operating policies, and targeted HR programs. All the new parts need to fit with the leadership's vision. In an acquisition, the acquired organization must be blended into the ongoing operation of the new parent in a way that retains the best practices of both institutions.

Direction from the Top

In a merger, middle management should be provided with a clear idea of what top management has decided the new organization will be. In an acquisition, the acquired organization must know how to fit into its new parent organization. Managers in the middle of the organization want (and need) to know quickly and explicitly how to set priorities and perform in ways consistent with management’s expectations.

Managers at the senior and mid levels should be drawn into the change process as early as possible – have them design the structures for their areas of responsibility. Encourage them to draw on the various levels within their reporting structures. This will create the broadest possible ownership base for the new organization. General policies also should be formulated drawing on a broad base of employees – policies such as defining the work force, customer service standards, and HR policies. Benchmark the best practices of other companies and utilize the best internal practices.

One of the most important investments in managing a transition is to communicate fully to everyone in the organization – using a wide variety of methods. You can’t communicate too much. While all employees cannot be involved directly in design activities, a communication strategy, with feedback loops, will involve them in the process. Involvement in making the transition successful should be viewed as an ongoing, continuous process. It goes without saying that displaced employees must be treated with respect and given help to find new positions in or outside the organization. The employees who remain will be watching how their colleagues are handled.

As soon as possible, the newly created business units should begin developing plans that show in detail what they will contribute to the new organization’s revenue stream. These measures become effective guides for keeping changes on course and for dealing with events that arise unexpectedly.

Just prior to the start up of the new organization have all managers and supervisors attend sessions in which they see how their work fits into the new organization. The sessions should align these employees squarely behind the organization’s new direction and help them develop plans for aligning the people who report to them. The end result is to make key employees partners in the new organization from the very beginning.

The best, most successful mergers and acquisitions start with a solid strategy from the top. Senior managers often utilize a third party to help them determine what the strategy should be and implement their plans. This assistance includes using these facilitators with middle and lower-level managers to develop structures, goals, and related plans. Facilitators are most often drawn from outside because of the objectivity they bring to helping manage the process.

Mobilizing people to support a merger/acquisition is the single most important element. Facilitators pinpoint roadblocks. They are sounding boards for ideas and decisions that affect the transition profoundly.