Mergers and Acquisitions require sophisticated change management to realise success.
Mergers and acquisitions are major events that can bring significant benefits, but also pose many challenges. One of the most critical and complex aspects of M&A is managing change, as it affects the culture, processes, systems and people of both parties.
The Change Team
The team to effect the successful change intervention needs essentially to display 3 facets:
- Strategy – deconstruct the strategic reason(s) for the merger (disinvestment by the seller, entering new markets on the buyer’s side, extending the product range) and the desired outcomes;
- Business Analysis – to reallocate the deconstructed requirements in order to get the strategy to work throughout the business. Which functions are affected and what do they need to change?
- Change – Convert the needs of the company which is merging, into messaging (evangelism which includes not only why the change is good but also a sense of purpose cohesion and loyalty amongst the employees), to communicate what and why the changes are necessary, develop the training to close the skills gap between what people were doing before and the new knowledge that they need.
Our job therefore is to ensure a smooth and successful transition, while minimising disruption and resistance.
Align the vision and goals
By aligning the vision and goals we create a clear and compelling vision and goals for the merger or acquisition which will become the narrative/blue-print for the entire Change Initiative.
What is the history, strategic objectives, benefits and synergies of the merger? How will the new business look and operate? How will it create value for the stakeholders? Communicate this vision and goals to all levels of the organisation and ensure that they are aligned with the existing values and mission. This will help to create a common purpose, direction, and identity for the change.
Engage and involve the stakeholders
Change can be stressful and unsettling for the stakeholders, especially the employees, customers, and suppliers of the merging or acquiring organisations. They may have concerns, questions, or fears about the impact of the change on their roles, relationships, and future.
To address these issues, you need to engage and involve them throughout the change process.
Identify and segment the key stakeholders, and understand their needs, expectations, and interests. Communicate with them frequently and transparently and provide them with relevant information and feedback. Solicit their input and feedback and involve them in decision-making and problem-solving. Recognise and reward their contributions and achievements. This will help to build trust, commitment, and ownership for the change.
Align leadership
Leadership alignment on the vision and outcomes of the initiative is critical. Without this, the change initiative is bound to fail due to a lack of prioritisation, lack of communication about the vision, or lack of key stakeholder engagement. If leadership can demonstrate that they are aligned and ready to support the initiative, then key stakeholders will prioritise and champion the change.
Define a list of opinion leaders; they are not always the same as the company’s formal executives. Opinion leaders are pillars in every company.
When you engage those leaders and align them with a common goal, giving them understanding that their expertise and vision matter, you will significantly reduce churn rate and the costs of company transformation. These individuals will lead, promote & implement ideas, ensuring the entire company moves in the same direction.
Assess and integrate the cultures
One of the biggest challenges of M&A is integrating the cultures of the merging or acquiring organisations.
Culture is the set of shared values, beliefs, norms and behaviours that shape how people work and interact. If the cultures are incompatible or clash, it can lead to conflicts, misunderstandings, and dissatisfaction. To avoid this, you need to assess and integrate the cultures of both parties.
Conduct a cultural audit to identify the similarities and differences in the cultures, and how they affect the performance, processes, and practices of the organisations.
- Define the desired culture for the new entity, and how it aligns with the vision and goals.
- Develop and implement a cultural integration plan and monitor and measure the progress and outcomes.
- Provide training, coaching, and support to help the employees adapt and embrace the new culture.
Streamline and standardise the processes and systems
Another challenge is streamlining and standardising the processes and systems of the merging or acquiring organisations.
Processes and systems are the ways of doing things, such as policies, procedures, workflows, tools, and technologies. If the processes and systems are inconsistent or incompatible, it can lead to inefficiencies, errors, and redundancies. To avoid this, you need to streamline and standardise the processes and systems of both parties.
Conduct a process and system audit to identify the best practices, gaps and opportunities for improvement.
- Define the optimal processes and systems for the new entity, and how they support the vision and goals.
- Develop and implement a process and system integration plan and monitor and measure the impact and results.
- Provide training, guidance, and resources to help the employees learn and use the new processes and systems.
Support and develop the people
The most important factor of M&A is the people; they are the ones who drive and execute the change.
People are the source of creativity, innovation and value creation. However, they are also the ones who may resist or reject the change if they feel insecure or unprepared.
To overcome this, you need to support and develop the people of both parties.
- Conduct a skills and competency assessment to identify the strengths, weaknesses, and development needs of the employees.
- Define the roles and responsibilities for the new entity, and how they align with the vision and goals.
- Develop and implement a talent management plan and monitor and measure the performance and satisfaction of the employees.
- Provide coaching, mentoring, and feedback to help the employees grow and excel.
- Provide recognition, appreciation, and incentives to motivate and retain the employees.
Manage the change effectively
Managing change during a merger or acquisition is essential for achieving the desired results and benefits. To do this effectively, you need to establish a change management team with clear roles and responsibilities, conduct a change readiness assessment, develop a change management strategy and plan, execute the plan, and evaluate the outcomes.
This process can be difficult, but it is necessary to ensure a smooth transition while minimising disruption and resistance. Ultimately, you can create a competitive advantage by leveraging the strengths of both parties.
