Effective Change Management During Mergers and Acquisitions

    Nov 10, 2016 | Posted by Michael Campbell

    Successfully managing change within a singular organisation is a feat that requires intensive consideration, structure, and buy-in. Successfully managing the changes of two individual organisations with separate employee workforces, leadership vales, cultures and processes whilst simultaneously combining them into a singular unit is a challenge that borders with impossible.

    Mergers and acquisitions are the process of integrating two or more companies with different values, cultures and forces into one cohesive organisation which creates shareholder value; and can cost companies trillions each year. But despite the high investment value placed on M&A, statistics reveal that the failure rate of these negotiated deals can be placed in the range of 50-75%. And in accordance to statistics released by KPMG a phenomenal 80% of these failed M&A are the result of improper handling of change management.

    During M&A, it is the people of both organisations who must weather the brunt of the disruptions leaving their leaders to face many challenges: cultural management, stress management, redundancies, HR restructuring, resistance to change, job insecurity, talent drainage - to name a few! Therefore, the change management implications of a M&A negotiation should not be considered in post integration, but rather a large determinant in whether a deal will create or destroy shareholder value.

    Effective change management during mergers and acquisitions should be driven as a core C-suite responsibility – charged with creating urgency, building buy-in from the board of directors, providing continued communication with employees and reassuring stakeholders. Change management risks must be aggressively analysed throughout the negotiation stage and far into the transition period.

    We explore the 5 risk factor areas to consider to drive successful change management throughout the integration process:

    1. The ability to create urgency and build buy-in for the business case

    Change for changes sake is very rarely received well in an organisational setting; especially in one where the perceived risk factor is extremely high. The motivations behind a particular change must be conveyed to all levels of the organisation and communicated emotively to secure their sponsorship.

    1. The variation in organisational cultures – amalgamation or engulfment

    Each corporate culture has distinct attributes and characteristics that have contributed to either the success or the failure of the organisation. Distilled from its unique situation and experiences an organisations culture is integral to its identity. Combining two distinct cultures, while also integrating the two identities requires caution and precision and even then is not always possible.

    1. The volume and types of changes that would be required during integration

    It is impossible to estimate and quantify the absolute number of volume of change required ahead of the M&A but giving consideration to the types and natures of the changes that will be required will stand you in good stead. Considering how each of the key stakeholders of both organisations will be impacted by the change and how they might react will also be beneficial.

    1. The most likely points of resistance and barriers to change

    Resistance to change is inevitable, but by giving forethought to where it can be expected to materialise allows preparations for its mitigation to be put in place. Barriers to change can arise at any point from, any direction and are not always predictable. But a strategy to manage if not prevent resistance is essential.

    1. A leadership strategy for driving enterprise change management in the new organisation

    It is one thing to identify the change management risks, it is another thing entirely to have a strategy and plan to manage those risks. Leadership and a governance model is essential to driving progress and measuring success.

    A merger or acquisition is one of the largest changes an organisation can undergo and it is often the people of the two organisations who experience the greatest disruptions. In order to cultivate and drive shareholder manage these changes must be managed successfully bringing together the two disparate companies into a cohesive unit. 



    Topics: change management