How to Save a Company After M&A

What would you do? You're the CEO of a company that has recently gone through a Merger and Acquisition (M&A). There is a new minority interest rewarded by an equity firm that has combined multiple entities, and as a result there are new board members. The new board members and equity firm are expecting a change in strategy, growth, higher levels of accomplishment, and more. The new direction has come on slow and the progress has been turbulent. This is causing confusion, uncertainty, loss of morale and motivation.

It’s a small industry, one in which everybody knows every body. The largest entity within the M&A has a long history of success, is recognized and well respected. In addition the company has culture, people, process, brand recognition, and a geographical footprint.

The industry is mature but the supply chain is changing and the industry is evolving unpredictably. Clearly there are pivot points, such as technology, consumer demands and demographics that are driving change.  

Engagement and morale is low, and there is indication that some in the c-suite are shopping opportunities elsewhere.  Direct reports are butting heads with the c-suite and the VP’s, and the sales force is turning over.  The non-compete clause is irrelevant as key employees decide to jump ship and move on to the competition, they are going to take their chances with the lawsuits. In addition, the sales staff that remains is struggling.

Often, the disharmony comes from the lack of agreement on the executive level. This is nothing to be ashamed of, but there is work that needs to be done and be done quickly. The executives have helped create a successful company, and industry for that matter; they obviously know what they are doing and they have a great deal of pride and attachment to it. They feel that there are a multitude of spoken and unspoken responsibilities to the company, its people, the outside vendors and suppliers, the community, and to their own sense of pride.

The new board members have none of the attachment to the company’s legacy. They have invested and are focused on ROI; they have short term and long-term goals and are expecting results. The pressure and stress levels are at an all time high. Without an alignment, the M&A stands to fail. This is fairly common, as ownership disagreements emerge and a new storming period arises.

As the CEO, you are determined to make this M&A work.  Everyone is counting on you. But how do you stop the bleeding and get everybody on the same page? You need a way to quickly understand the people and the culture of the merging organization, and align the old and new. You need to know where the cultures may clash and how align them.

The main objective is to make quick progress without the downside that comes with implementing change. How do you, the CEO, change strategy without loosing momentum, people, and results? Just as importantly, how do you keep all the experience, expertise, and dedication with your Leadership Team (LT) and the company in general?

Implementing such change using your inside resources only, is likely to be difficult, longer than desired, and the likelihood of success is, unfortunately, low. The reasons are simple: the internal resources see the change as both an opportunity (for themselves) and a threat. As such, they may not be as coachable and open as they normally would be. In addition, your position, the position of the CEO, is easy to attack during the times of an M&A change, so your abilities to motivate and discipline are constrained. 

Often it takes someone from the outside to have an externally driven leadership alignment program. This is a program where the executive team and board members work through the leadership concerts. This is strategy, implementation, competition, internal alignment, understanding the individual roles, and reviewing the executives’ ability to deliver on strategy. There is a system that is followed, and the specific topics are defined based on what is learned in the investigative phase. This program is remarkably effective.

A common result is an agreement on the Leadership Team (LT), a new strategy, and an understanding, commitment, and motivation of each LT member to deliver the new strategy. Sometimes, this process also results in functional reassignments, promotions into a Leadership Role, and 1:1 executive coaching.

In the same time, as the CEO, you need an insight into what are the cultural alignments, misalignments and how to make the best of the situation. There are solutions that offer an organizational insight that identifies incompatible values, disconnects, and threats. This is used to create a set of specific actions to harmonize the merging culture.

In other instances, especially when the need for confidentiality is high, a self-administered solution that assesses employees and management is recommended. This positions the company to do an internal analysis and alignment on its own with the know-how to apply it whenever the need arises.

The insights into what drives people, allows companies to understand and position their resources in a very functional way. It reveals what are the drives of each individual and if there is a match between the personality and the function. It also reveals how to approach those who resist change. Such a solution enables the CEO to understand and drive his own LT, and all other managers to do the same on their teams. There are suite-based-solutions that offer a host of other capabilities and functions, and are used from an entry-level worker all the way to the executives.

On any level these systems can offer insights that would be relevant to the company, and can be internally owned, administered, and the data is kept private. This means that the executives in charge can gain incredible insights into their people and functions, without relying on external help. With help from a respectful firm, they can explain how it works and teach the internal staff how to utilize the solution.

The best firms convert adversity into opportunity by improving individual effectiveness, team dynamics and engagement through best in class solutions that businesses need to be utilizing.