October 17, 2018
Companies seeking to expand opportunities, capabilities, and their customer base through corporate mergers have just one shot to get it right. And while there are many factors that will impact a merger’s success, HighPoint Associates believes intentionality before the merger occurs, including sound planning and communication behind those intentions, is primary.
What exactly do we mean by intentionality? It’s the thoughtful consideration of the positive change–strategic growth into new markets, reducing costs through scale, expansion of service/product capability areas–the merger will bring about, and how that change will be achieved. It’s therefore critical for the company instigating the merger to start the Pre-Merger Planning process by first answering this single question: What are the desired goals of the combination of these two entities? Once goals are established, clearly articulating those intentions to internal stakeholders and achieving buy-in on them before the merger gets underway are crucial.
Communicating Intentions to Manage Business Disruptions
Intentionality is central because the overarching objective of the merger (growth, scale efficiency, or capability expansion) will fundamentally dictate the pace and cadence of post-merger integration, time horizon for success, and communications.
No matter how successful a merger ultimately is, there’s no avoiding or denying it–business combinations are disruptive to employees and the culture of the newly formed organization. But clear and consistent communication that is tied to a merger’s intentionality and associated timeline, and that explains how the merger will impact the new entity’s people and systems, will help manage these disruptions and support the overall intentions of the merger.
For a successful integration, intentions must be communicated, understood, and accepted throughout all levels of the new organization. As an example: If an acquiring company intends to lower costs through scale, speed is of the essence. Decisive planning, transparent communication, and speed will mitigate unnecessary anxiety and declines in productivity. Quickly and honestly communicating larger changes to the existing and new workforce increases the probability of success. Other changes to communicate include the successful, full-potential point of arrival, the merger’s short and mid-term goals, new management team structures, and any new compensation systems which reinforce this intentionality.
Strategic mergers have the potential to bring enterprise and team member opportunity, but can be more complicated than necessary, or even destructive, if not intentional from day one. Avoid the latter by understanding that intentions matter throughout all phases of the Pre- and Post-Merger Planning and Integration process, and they should underpin all communications.