Most takeovers or mergers of medium-sized or multinational companies do not produce the desired results. Scientific data shows that 60 to 80 percent of company mergers do not have the desired effect - even though the strategy and preparation were right.
Why is this then?
Practice shows that post-merger integrations often fall short. There can be various reasons for this, such as new priorities or a busy schedule, but all too often there is also a mutual lack of understanding: among management, but also among the employees of the companies involved in the merger. A lot of time and money is lost in the process.
If you want better results from mergers, you shouldn't just rely on your business expertise. My advice: take the soft factors seriously as well.
Corporate culture is the basis for uniform goals
As a proven professional in the field, I recommend that you attach great importance to the integration of the different corporate cultures in post-merger processes. This is probably the most important prerequisite for setting uniform corporate goals that are actually accepted and practiced in the new company. After all, corporate culture is the factor that shapes cooperation within the company more than anything else:
- Culture includes the corporate values that those responsible use as a guide when defining goals.
- In addition, there are various behavioural norms that have a major influence on how processes and workflows are implemented.
- Finally, the various internal company conventions that influence communication processes and whose knowledge is very important for smooth communication.
Merging these elements is one of the most important tasks after a merger.
The most important success factors: Leadership, communication and transparency
You have no doubt already experienced how time-consuming - regardless of the size and complexity of the merger - such an integration can be. To turn a well-prepared M&A transaction into a success story, it takes much more than good contracts, optimal due diligence and the conviction that it will thrive for the benefit of both organizations.
In my opinion, the key to a successful merger of two companies with as little collateral damage as possible is
- leadership,
- communication and
- a realistic implementation scenario that allows sufficient time for development.
These require a lot of time - and ultimately also money and resources. These three aspects can be concretized in practice with seven steps:
1. Develop an integration plan.
A well-thought-out integration plan is essential. It should include a detailed timeline, clear objectives and measurable targets. However, the integration plan must not only reflect your own wishes, but must also take into account possible risks and resistance. After all, a plan alone is no guarantee of success.
2. Form a strong management team.
Once the theoretical foundation has been laid, you need strong leadership to ensure the success of the post merger integration. This leadership must be present and contactable. It must be able to interact with various stakeholders - and demonstrate a stringent line in terms of message and objective.
3. Communicate the realignment convincingly.
Accordingly, the communication must neither be superficial nor consist mainly of platitudes if it is to convince everyone involved of the realignment. Firstly, there must be a clear vision for the new company. You must also be able to communicate this vision effectively. Any linguistic and cultural differences must be known and, if possible, eliminated in advance. You will also need a lot of time and resources for this.
4. Ensure customer loyalty.
An M&A transaction calculates with the absolute figures of the past in order to map the success of the future. Customer retention is therefore crucial to the success of the new company. In order to achieve this, various measures must be examined and also weighed up economically. In any case, the possibly. new goals and corresponding information must be communicated to existing customers in such a way that there is no room for concerns.
5. Plan the consolidation of systems and processes.
An important part of integration processes following a merger is the consolidation of systems and processes. However, the desired simplification usually takes place against the wishes and will of various stakeholders. However, it is necessary in order to streamline processes and improve their efficiency.
My recommendation is therefore not to want to achieve everything at once. The integration plan must anticipate consolidation. But you would do well to weigh up the benefits you will achieve and the risks involved. A timetable and step-by-step plan will help you to keep employees, customers, suppliers and third parties on board. Allow sufficient time and resources for this as well.
6. Develop a talent management plan.
The success of the new organization also depends on how well it manages to retain key employees: You should prevent important know-how from being lost or relationships with customers and suppliers from becoming fragile. Retention management programs have often been developed as a countermeasure. By means of money, which is paid out in two to three years, the aim is to motivate the workforce to stay.
Practice has proven the success of such measures wrong - also because it is hardly possible to attract new talent if the rest of the team is just holding out until the payout. The more time-consuming but better way is to develop a talent management plan. This documents appreciation and interest. People do not develop the feeling that they have been bought. This part of the process also costs time, resources and money.
7. Plan for investment in staff and technology.
As all phases of cultural integration require money and resources, financial management also plays a crucial role. You certainly want to implement savings as quickly as possible. However, it is advantageous to plan for further investments in personnel and technology in the integration plan from the outset - in addition to all the expenditure already made.
Conclusion: Merging corporate cultures is central to successful post-merger integration
It is essential for the success of a post-merger integration to also merge the corporate cultures of the merging companies. In my experience, three things are important in this process:
- A strong and present leadership with a clear line is required.
- The direction of the new company must also be communicated convincingly to all stakeholders, including across linguistic and cultural boundaries.
- Finally, a realistic integration plan that gives the process the necessary time is just as important.
All of this is certainly time-consuming and associated with costs. But in view of the high number of takeovers and mergers that fall short of expectations, the investment in the post-merger integration of corporate cultures should be worthwhile.
