Would you have heart surgery from a surgeon whose success rate was 50%?
“Various measures of M&A failure: inferior long-term stock performance, inferior operating performance, and target divestment. ….Our results indicate M&A failure rates up to 50% in both samples of listed targets and privately-held targets.”.-European Financial Management*
Change management can make or break a successful M&A
If Change Management is NOT Implemented
- Productivity declines as people become more consumed with the how the merger and acquisition will impact them.
- Passive and active resistance festers, emerges and may sabotages the merger and acquisition.
- Valued employees leave the organization. Rarely do the underperformers leave.
- Employees begin arguing about change and the direction of the new company, cliques form very quickly and an “us” and “them” mentality starts to develop.
- Leaving a communications void will only increase the sense of uneasiness among employees and allow negativity to creep in. There will be no lack of communication! Just inaccurate “grapevine” communications.
With Change Management
- Anxiety is reduced due to clear communications and expectation so worker can concentrate on work.
- Using effective change management and communications keeps morale up and helps with your customer’s perceptions.
- Well run mergers energize and motivate the staff.
Someone has to be the Dog and Someone has to be the Tail
I have seen large companies with antiquated systems becoming subservient to smaller more efficiently run (usually younger) companies.
People Still Need to Keep the Dump Running
The uncertainty, disruption and anxiety that a merger and acquisition can cause can put keeping your existing systems running at risk. Although no one is indispensable losing key people can impact customer service or perceived service. Courting key people can be very important.
Connectivity is ALWAYS an Issue
Every merge I have been involved in, has trouble with the following: email, calendars, phones, live meetings, servers, shared drives, and converting to single systems.
Don’t let your company join the 50% failure rate with poor change management. Successful mergers have all teams on board with your new visions and changes. Create greater longevity and profits by concentrating on the employees AND the bottom-line.
About Glen Lucchesi
Over a span of 7 years I have worked as a Project Manager to help with mergers and acquisitions converting over 38,000 employees, 15 market based organizations, 100’s of hospitals, and 100’s of clinics from disparate time entry methods to a standardized automated time and attendance system using clocks, phones and the web. I also coordinated with ERP systems and payroll systems to insure payroll was not disrupted. I coordinated implementation, testing, reconciliation, and support between internal IT staff, business users, and multiple 3rd party vendors and helped in support and training at multiple client sites across the United States. I created and managed issue tracking and resolution, risk management and mitigation, and testing/reconciliation plans and acted as a cheerleader/customer service representative to represent the client and 3rd party vendors in a positive light.*Craninckx, K. and Huyghebaert, N. (2011), Can Stock Markets Predict M&A Failure? A Study of European Transactions in the Fifth Takeover Wave. European Financial Management, 17: 9–45. doi: 10.1111/j.1468-036X.2010.00541.x