Mergers and Acquisitions

 

IMAGE SOURCE: https://www.ey.com/en_gl/ccb/20/dealmaking-is-expected-in-many-flavors-in-2019

Yet statistics show M&A failure rates sitting between 70% and 90%.[2] Research suggests these high rates are attributed to the average acquirer materially overestimating the synergies that a merger is likely to yield.[3]  At Emberson we believe cultural integration and brand fit can also have a profound impact on M&A success. Whatever market conditions influence your M&A decisions, one thing is for certain – no matter which structure you choose, the resulting organisational changes will impact your brand and culture in unpredictable ways.

We’re interested in how organisational change affects and influences people and how brand and culture can be used to generate positive energy and breed new ideas. Over the years we’ve worked with many clients to overcome the challenges they face during M&As.

Through our own experience and research, we’ve identified five of the most commonly-encountered issues, together with the corresponding creative strategies to help you navigate the challenges you’ll face on your M&A journey and engage your workforce along the way.

1. Brand is critical to the M&A process

Most M&A programs we work on result in consolidation, leaving brands and their people irrevocably changed. We see leaders’ attention focused on planning, financial projections and processes, which often means the brand suffers during and post M&A. Suddenly people find themselves thrown into a new ‘brand landscape’, with new colleagues, systems, processes and procedures. With little time to adjust to their new surroundings or ways of working.

During this time the ‘brand’ can become diluted or used in conflicting ways. With people finding it hard to let go of old habits, understand how the new ‘brand’ works, or more importantly, what role they play in its strategic delivery. At its lowest common denominator, brand simply equates to logo and as such it becomes someone else’s responsibility.

How to respond: Use the M&A process to re-evaluate what ‘brand’ means

At Emberson we believe all great brands are built from the inside out not vice versa. This is why a brand’s people, and the cultures they foster, are one of an organisation’s most powerful and enduring assets.

The M&A process is therefore a perfect time to re-evaluate what your ‘brand’ means for every employee, from bottom to top. People need to understand not only the brand’s strategic purpose but what their role and responsibility is within its operation.

We work closely with our clients to help them translate their brand values into tangible behaviours and value-led benefits. Allowing every employee to see and understand how their contribution makes a difference to the brand.

Value-led brands, operating with a strong brand culture can use their values and behaviours as metrics to not only evaluate their brand’s impact and performance but also enable them to build greater brand value and success.

2. Change is inevitable, so be prepared

Whilst every M&A is different, they always signal the beginning of widespread, organisational changes. Unfortunately, due in part to the sensitive nature of most M&A deals, information is usually limited to high-level stakeholders. This means communication can be slow or non-existent and is replaced instead by uncertainty, doubt or worse, misinformation.

These negative connotations can be disruptive forces during M&A proceedings and can have a long-lasting effect on your people if not managed correctly. Anxiety during this time can lead to strategies of separation rather than integration. Leaving people with their own agendas to push, where conflicts can arise, and the availability of resources will mean opportunities are missed or projects falter.

How to respond: Communicate, communicate and communicate some more…

It may seem obvious but it is vital to keep communication channels open during the M&A process. We work with clients to focus on communicating exactly what various audiences need to hear rather than how often. This communication and message mapping allows clients to:

  • Communicate the ‘why’ behind M&A proceedings as soon as it is feasible
  • Think about strategic messages i.e. what each audience needs to hear and how to best deliver them
  • Present a communications plan with important milestones and updates to ensure people feel like they’re always ‘in-the-know’
  • Ensure internal communication planning starts the moment the M&A is launched. Making sure news is delivered before gossip and speculation start
  • Provide managers with an evolving FAQ document so they can field questions, respond in the right way and capture how people are feeling
  • Build in feedback loops to allow two-way communication
  • Reassure people when and where you can but always remain honest and open. It is when communication breaks down that anxiety becomes dangerous

3. Become active listeners: Give people an opportunity to share their experiences

M&As can be emotionally charged and unsettling times. It’s not uncommon to see conflicts arise and cultures collide as people attempt to understand how changes affect them.

For many employees this may be their first experience of the M&A process, whereas others may have seen it all before. No matter what position or experience a person holds, they should feel able to express their thoughts and feelings at all times.

How to respond: Engage HR to plan the path to employee engagement

We spend a significant proportion of our lives at work, so it’s understandable that changes we encounter, especially those that unsettle us, can impact our emotions.

From day one we work with our client’s HR teams to demonstrate the value they can deliver during M&A proceedings. Often taking on a phased approach to allow for a more controlled delivery of communication and considered period of employee consultation:

  • Operate an open-door policy to encourage staff to talk about their thoughts and feelings. This allows you to keep a close eye on the emotional well-being of the organisation as it experiences change
  • Be prepared to lose people along the way, think of it as a flight or fight response to organisational changes. This is where recruitment, training, reward and discipline become invaluable to your future success
  • Design programs for HR teams to link the brand experience to renumeration and reward packages so that changes can be viewed in a more positive way
  • Brief managers so they can run team talks and brand briefings to facilitate feedback loops and status reports back to management teams
  • Run a series of roadshows, open forums or townhall meetings where staff can meet leaders to discuss and address their concerns

4. Engagement is key: Get employees on board as soon as you can

Not all emotions arising from M&As are negative. There will be those who will be excited about the changes and see it as an opportunity. You need to channel and utilise this positivity to your advantage.

How to respond: Set up an ambassador program

Over the years we’ve helped numerous clients set up and build brand ambassador groups. These groups are made up of volunteer representatives from across the organisation who help to fill the gaps between employees, managers, and leadership. Think of them as your ‘early adopters’ using Everett Rogers’ Diffusion of Innovation Model.

The aim is for your ambassadors to help share and disseminate information regarding changes affecting colleagues but also to keep the flow of information coming. They’ll enable you to reach some of your notoriously hard to reach colleagues (or laggards). However, they’re not there to be the fall guys for any bad news that has to be shared, this has to come from managers or leaders.

By working with employees in this way to continually break down barriers, risk can be reduced, and the value of your strategic solutions can go up. Meaning the value of the M&A is more likely to be embraced and adopted by the entire organisation rather than just those keen to embrace change.

5. Collaborate to innovate: It’s all about teamwork

For many employees a common coping strategy when faced with uncertainty is to retreat into their shells and think only of themselves. Unfortunately, this approach makes employees far less open to change, narrowing their field of perspective and potentially crippling productivity amongst teams.

This can also impact any new employees being introduced to the organisation, individualism prevents new employees becoming integrated into the business, hindering teamwork and progress even further.

How to respond: Focus on team building

Singlemindedness can be countered by encouraging team building events and experiences. We create, enable and facilitate opportunities on behalf of clients that allow teams to collaborate in fun, safe and constructive environments.

Activities and events designed in this way encourage teams to cross pollinate their ideas and problem solve together, foster team spirit, and help nurture collaborative cultures. It helps remind them that the whole is always greater than the sum of its parts.

If change is the inevitable outcome of your organisation’s strategic M&A challenges, why not consider Future Positive. Our clients depend on us for fast, effective, measurable results, why not see for yourself.

#embracethechange

References
1 Source: https://money.cnn.com/2018/05/24/investing/merger-boom/index.html
2 Source: https://hbr.org/2011/03/the-big-idea-the-new-ma-playbook
3 Source: The Winner’s Curse: Paradoxes and Anomalies in Economic Life, Richard H. Thaler