March 22, 2017 | By larry |
By: Scott Weighart, Director of Learning and Development
Most companies underestimate how long it will take to realize the value from a merger or acquisition. Senior executives enter into deals seeking to make their companies more competitive, expand their markets, build new offerings, and evolve with changing needs of their customers – all in the service of driving growth. Most appreciate that the integration phase will be lengthy and challenging. They don’t necessarily realize that the work has just begun when the ink dries on the deal.
As the pace of M&A hastens, the urgency around figuring out how to create value in the newly combined organization accelerates. When acquisitions fail, it’s almost never because the strategy was wrong; it’s because the execution was poor. Bringing different organizations together requires a different kind of leadership than leading organic growth.
What does your team need to know going into a deal to make it a success? We have researched the execution side of mergers and acquisitions and learned a lot about what differentiates leadership teams who do it well from those who don’t. Through our work with integration teams, we’ve developed a view on how to beat the odds.
Tackling the Confounding Challenge of Delivering Value in a Merger or Acquisition
Communication during the pre-deal stages is naturally limited because of regulation and prudent deal management. However, during that time, tension builds in the respective organizations. Leaders busy working out the details and mechanics of a deal may not always appreciate the depth of angst during this period.
Stress caused by uncertainty and anticipation is simply a reality until a deal is done. The result is people can be demotivated, paralyzed, and wrung out. Even A-players who are on board and working to help you know that behind closed doors, deliberations between senior management could have a significant impact on their careers.
Once the deal is complete and communication less constrained, senior leaders can begin cascading the plan for the new organization. At this stage though, the decisions may still not be made. In addition, many leaders believe they are communicating more information than they are. The result can be that people experience what they get as “dribs and drabs” of information. For example, an announcement about organizational structure changes, or leader changes may not be accompanied by the “why.”
All this is to say that, in our experience, even when a communication plan is in place, leadership needs to act in ways that are different than when they are leading a company through organic growth. They may see it as sufficient to send out email announcements and conduct town hall meetings or videos that highlight a plan.
While these steps are an important part of the process, they’re only the beginning. What is required is a full-out, sustained effort to create a productive, positive dialogue with the organization, one that acknowledges the people side of the equation. Leaders need to dial up engagement, excite people about a vision for the future, and ignite an above-and-beyond effort to realize the value of the new entity.
Targeting the Right Leadership Qualities
Our research shows that there are specific qualities of leadership that make or break organizations in times of radical change such as a merger. The qualities often most important, and least exercised, are the social-emotional qualities of leadership. We have done extensive research in a leadership model that defines executive presence, one that includes these qualities.
What are a few of the qualities we know from research that are likely to determine the success of the leadership team in driving the value of a merger?