How to maximize the ROI from strategic M&A

Posted by David Miller


They key to gaining maximum return from a strategic M&A is to minimize business disruption as much as possible.  Smoothly integrating two companies, or even two divisions, requires the integration team to take a holistic view of the endeavor, focus on the people and culture aspects of the merger as well as the integration of technical, physical and intangible assets.

A core theme of any merger is understanding the impact to the workforce

Unless the acquisition will result running a stand-alone business, a strategic merger requires a strong program of work to integrate all aspects of the acquired unit into an existing business operation.  Choosing how to merge business systems, processes, office space are all aspects of the integration which need careful planning and implementation.

The people aspect of the organizations also need attention.  The HR/OD teams will be looking at culture, skill sets and workforce levels required as a result of the merger. 

Running across all of the elements is a single core theme – every change made, to the existing organization or the incoming organization, has an impact on the workforce.  Seemingly minor changes, such as moving to one organization’s expense claim system or minor process changes, to major changes, such as office moves or redundancies, impact the people in the organization.

Managed well, these changes can result in minimal disruption to day to day operations, and even boost morale and productivity across the board.  Managed poorly, and you risk eroding the value of your current and acquired organization

 Using a people centric change management process in strategic M&A helps maximize returns

Taking a people-centric enterprise change management approach ensures that the key elements to successful change are considered: the impact on the workforce, on employee motivation and their willingness to accept and embrace the upcoming changes. 

Effective change management overcomes resistance and builds the necessary commitment in people that enables them to be ready, willing and able to change.  Here are four simple points to consider that can help you manage resistance, maintain focus and minimize disruption to the business during the merger.

 Understand where the two organizations are in terms of change readiness. Organizations that have undergone significant change in the past may be experiencing change fatigue; employees simply do not have the capacity to embrace significant changes in a rapid period of time.  A change assessment is a good way to easily assess organization change readiness and identify key risk areas.

Leadership alignment is critical.  Misalignment between leaders’ words and actions can instill cynicism about the integration across teams and increase their resistance to embrace the new organization.  Provide support, motivation and relevant training for your leaders to ‘walk the talk’. 

Change agents reach the personal level.  Change is deeply personal and every individual reacts to change in their own manner.  Employees need lots of information, visibility into the future and the ability to provide feedback or voice concerns.  Internal change agents, when selected correctly, have grass roots access into their teams and can provide the support, and 360° communication channels, needed.

Poor change management process leads to a bumpy integration: without a consistent framework across the whole integration effort, successful integration efforts in one work stream can quickly be eroded by failed attempts in others.  Symptoms include misaligned and possibly conflicting integration goals, lack of a common language across all efforts leading to miscommunication and erosion of leadership statements.

 An effective merger relies on maintaining and building upon business performance. 

Actions to merge physical and technical assets need to be planned carefully.  Likewise change management plans to maintain employee motivation, minimize unwanted workforce turnover and retain the tacit, unwritten, knowledge within the newly merged company, are critical to maximize your strategic M&A ROI.

Read more about how to consider and plan for the personal side of change in our white paperHow to avoid and overcome the pitfalls arising from organizational change.


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Tags: ROI, strategic M&A, change assessment, change management process

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