Five Keys to an Awesome M&A

Updated: October 11, 2010

Sometimes it's easy to forget that opportunity once the deal is complete. When the deal is signed and we roll up our sleeves as the true blending begins, it's easy to be overwhelmed by the day-to-day reality of blending two completely unique business entities.

To keep the power of the vision and opportunity alive - here are key approaches I recommend to clients:

Define the strategy and vision upfront and for all to see. Sometimes execs introduce the coming event with high level glimpses of the strategy - not wanting to set the wrong expectations before the details are all ironed out. This leaves the door open for personal opinions and perspectives to take the lead - and assumptions to be made. It's human nature to apply our own predispositions to our analysis - and that's when ego and turf can take priority over continuing toward the initial vision. As early as you can, state the vision and the steps to get there clearly and concisely, and keep refining with all those involved on a regular and frequent basis.

Stay positive and passionate about the vision. But we are - we're excited! Of course you are - you bought or are merging with the other company after all. Yet somewhere in your organization are folks who don't share that perspective. We all know that. But we need to do something about it. The snide remarks at the water cooler or the condescending remarks made in departmental meetings do more to undermine the success of an M&A than any other single action. These opinions need to be heard and settled once and for all - and then folks either need to get into the boat or go take another train. Dissension in the ranks of an M&A is wasteful and detrimental to success. Nip it in the bud and move on - visibly and swiftly.

Be thorough with your best-of-the-best planning. We technologists tend to get all excited about the products and solutions and innovation that we can bring together. But the best-of-the best goes far beyond the offerings we can deliver. Some other factors to consider include:

  • Technology. Often the value that companies tout as part of the M&A due diligence may not be the best-of-the-best for going forward. Make sure you look at ALL the technologies in play, map them to the plan for future markets and customers - and put the resources on your best future opportunities, and not just on the legacy products that may be on the verge of end of life.
  • Customers and the teams who support them. Customers are one of the biggest assets an M&A offers. Combining two companies with overlapping and yet diverse customer bases can bring immediate market penetration and even leadership. Take the time to thoroughly understand the customer opportunities - past, present and future. And also, be sure and communicate with the customers - in more than an email and new s announcement. I see so many companies do a press release and email and then expect customers to be happy about the change in vendors - while they leave the cleanup to sales and customer support reps. Executives and leaders need to be involved with customer transitions - be present, be obvious and communicate, communicate, communicate.

Be sure to view customers with an eye toward the future as well as the past and present. Too often we look at the biggest customers as the best going forward opportunity - when in fact some of the smaller customers may hold the keys to that new market or emerging opportunity we‘ve been seeking. Make sure your sales and customer facing executives charged with the blending have a clear vision of the future - and don't make short-term decisions that can blow your longer term opportunities.

Finally, be sure to thoroughly evaluate the teams who support those customers. Those teams may be the reason those customers hang around…and will stay around. For example:

  • Sales and pre-sales relationships are complex and often quite personal. Before you start substituting players, make sure you understand the dynamics. Buying decisions are often made based on these relationships -when you change the rep you may lose the business.
  • Service and Support relationships can be even more valuable. These are the folks the customers trust to come to the rescue - and many times they are the keeper of the customer truth. Listen and learn that truth before you make any decisions to let your own folks take the lead.
  • Marketing relationships with customers can give you huge insights -when you pay attention. Too often we look at the folks who lead the User groups or industry/special interest groups and see overhead and duplication - when they may have critical customer information that can add value to our overall assessment and going forward planning.
  • Expertise. Experts come in many forms, and all are valuable beyond measure. Too often we look at the technologists, the leaders, the innovators - and often ignore some of the most powerful expertise we acquire. From the executive administrative assistant who knows the CEOs of every customer in and out (including their favorite lunches, their birthdays, their wife and kids names) to the telephone support rep who has a great relationship with customers in key markets to the industry marketing manager who knows more about your next target than your whole company combined - pay attention to the expertise. Listen and Learn and leave the ego behind.
  • Market perception. Sometimes the acquiring company is perceived as the leader and has the best overall brand and image. But often that's not the case. The perception of expertise is something that takes years of effort to develop with customers and the market at large. Think twice before you throw it away because of turf or misperceptions. Look carefully at the perception each of the entities holds - and play your cards so that you leverage the best option possible - which may mean anything from assuming the name of the acquired company to maintaining their expert position as a subsidiary to adopting everything about them. Perception rules and it's easier and lower cost to leverage what's in place than to invest time and money to evolve people's beliefs.

Instill intra-company teamwork immediately. Set the stage by putting together teams with members from both companies. Give them the goal of working together to define the best options for moving forward in their respective areas. Give joint responsibility to execs or managers from both companies - and let them know you expect them to work together toward your vision - and leave their egos and turf at the door. I know - that's a hard thing to ask people to do. But business is business and there's no room for turf battles in an M&A - it's yet another reason mergers fail.

  • Craft the teams up front - put the respective thought leaders from both companies into organizational teams. Direct them to work together to form a tactical plan for integrating their best of the best. Give responsibility to leaders from BOTH companies - cause them to work together with mutual goals and direction. Fuel the partnership vs. antagonism and reward teamwork visibly and often.
  • Company cultures are as different as countries'. Be sure to respect the culture you're acquiring - even if it is different from your own. Shoving a culture down new employees' throats is a fast way to instill rebellion. Instead, form a working team to document and compare the two companies' cultures. Ask them to make a recommendation on shifts from both perspectives to bring the best blend. Then find a way to communicate and promote those shifts internally - contests, open forums, anything to get people recognizing that differences can be celebrated - and become the chance for growth and expansion.
  • Processes can be valuable - if given the chance. One client's whose product definition process was the most streamlined I'd ever seen. Their merger partner recognized that fact - and instilled that same process into the new organization. It wasn't easy - the merging teams didn't respond well to change. But within six months everyone involved agreed it was the right thing to do - since they were more productive and informed than ever before.

Dig Deep. One of the biggest challenges with reinvention strategy - whether it is for an M&A or product launch or turnaround - is that we don't often dig deep enough to find the jewels hidden among the clutter. We get lost in the noise - the buzz about the biggest and brightest and best. The ‘knowns' come front and center and the ‘yet to be founds' often end up in the bottom of a pile - never to see the light of day.

The challenge is that in more companies than you'd expect - the true value, the crown jewels that will take you to the next level of success - may not be that obvious. At least not to the folks who live with them day in and day out.

  • That technology sitting on the shelf that was developed 10 years ago - ahead of its time - may be the key to reinvention and future growth.
  • That relatively small market that's been a side business for a year now may be the next big opportunity -if it can get attention from the crowd swarming to the status quo ‘big' customers.
  • Those five guys in the corner lab doing things no one really understands may be onto the next big innovation - and a perspective that will change a paradigm for good. Too bad they haven't shared their vision beyond technology. No one ‘gets' the opportunity so they may go the way of the wooly mammoth - when in fact they are creating the next game changer.

Take time to get away from the day-to-day perspectives and knowns. Dig deep within the organization; look at things from a fresh perspective, without the contamination of the plan. Sometimes it's valuable to bring in objective outsiders to take a look with you - they don't have the baggage and beliefs that all of your employees and executives have collected along the way. That's one of the values a strategic consultant can bring to the table - assuming they have the fundamental market and technical understanding to get up to speed quickly on your opportunity, your markets, your vision.

Above all, executives must set the tone of an M&A event. That tone needs to go beyond the initial company meetings and announcements. It has to permeate each and every interaction from exec round tables to coffee in the kitchen. Leadership is often the difference between a successful or failed M&A.

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