101: Managing your company through a merger or acquisition
Mergers and acquisitions can be a mixed bag of emotions and strategies depending on which side you are on. For the acquiring business, it is expansion, growth, and the next step forward. For the business being acquired, it could mean apprehension and fear of job security. Ultimately, through strategizing using thorough vetting, engaging middle management, and integrating company cultures, the two companies can find cohesion and become better together.
Strategizing using thorough vetting. A merger and acquisition should not be a sporadic action, but a strategic move that a company has spent time, sometimes years, maneuvering. According to J.P. Morgan’s Q&A with Landscape Forms CEO Margie Simmons, businesses should carefully assess the size, brand, and culture of the prospective company they want to acquire. If a company is too big, it will take more resources to obtain, and if it is too small, the cost might not be worth the benefit. Additionally, assessing brand impact on the market and learning about the company culture assists in a smooth transition.
Engaging middle management. Acquisitions can cause trepidation in employees who are afraid they may lose their jobs. As a result, they look to their current managers for reassurance. Because of this, Susan Ladika, writing for the Society for Human Resource Management, suggests incorporating middle management as part of the transition strategy and allowing them to provide confidence they are directly interfacing with employees. Ladika explains while there may only be a handful of C-suite executives, there are often hundreds of middle managers who can be key in keeping workers motivated so a successful acquisition can take place. According to a 2019 study by The Conference Board, companies who actively engaged middle management were more successful in mergers than those who did not.
Integrating company cultures. Synergy is a word that is often used in the mergers and acquisitions space because it underlines how important it is for two companies to find commonality for the merger to be successful. Integrating cultures can often be the make-or-break obstacle for mergers. To overcome this hurdle, Kison Patel, writing in the M&A Science Newsletter on LinkedIn, suggests performing a cultural audit evaluating how similar and different the companies are in terms of performance and goals. Providing training helps employees adapt to the new, combined culture of the new entity.
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