When companies merge or acquire, expectations for shareholder and customer value naturally rise. Yet studies by the Federal Trade Commission, Deloitte and others repeatedly show that as many as 70% of companies that engage in merger and acquisitions fail to increase shareholder value.
Why does this happen when the logic behind M&A activity is typically so obvious? Simple: mergers and acquisitions are often driven by numbers, rather than people. In other words, we do them because we’re going to add to the bottom line, we’re going to increase profitably. Yet what appeared to make sense on paper and during due diligence, invariably proves much more difficult and complex when trying to make tangible changes on the ground.
Unfortunately spreadsheets do little to account for the complexities of change, the human factors behind the deal and the need for effective integration planning and execution to deal with both of those complexities. There are many factors to consider from a customer, technology, supply chain, business process and people perspective, yet it is exactly these factors that are often forgotten in the thrill of the chase.
The human factor is often the missing link…
Major change is always difficult but post-merger the challenges are multiplied by dealing with different businesses and cultures, in a tense and nervous atmosphere that is not always conducive to quick decisions and mutual consent. Personal agendas, fears for the future and market reaction often get in the way of business rationale in decision making. The challenges are many and varied and without an effective integration plan you can lose sight of why you started: to increase returns for your shareholders.
In our experience, the key to success is often to engage independent professional Change Leadership support early – ideally before the deal is announced – not to manage the due diligence or all of the other aspects that finance-led advisories will support you on, but instead to focus on preparing and driving the change ahead. We can use our experience of leading major integrations to help you to prepare crucial elements such as testing your strategy, preparing the employee narrative, leading union consultation, IT integration and benefit delivery.
At Project One, we only lead business critical change: nothing else. We work with major companies like yours to ensure that their business change and transformation initiatives deliver the results they need. And change does not get much bigger than dealing with a major M&A deal. But fear not: by combining our Change Leadership approach with expert consultants, your M&A will be one of the 30% that delivers the desired results for shareholders.