How do you ensure a successful merger

IT for the financial decision maker

For top managers, it is often the highlight of their careers when they can proclaim: "Our company is taking over a competitor." At this point in time, their forecasts are accordingly confident: "The merger will increase our market share by 15 and our sales by 20 percent. We can also achieve high synergy effects." Or: "The merger opens up new business fields and sales markets for us. This opens up completely new perspectives for us."

Everyday life after the takeover or merger has been announced is all the more sobering. Because the top managers often underestimate the pitfalls of the associated integration process - especially on the cultural level. Because, unlike its structures and processes, the culture of a company can only be captured to a limited extent with instruments such as organizational charts and flowcharts. And how did it develop? It can only be partially planned on the "drawing board".

Mergers and restructurings always trigger uncertainties and fears among the employees of the companies concerned - because there are always losers as well as winners. Or at least people who see themselves as such. These mostly diffuse fears and apprehensions need to be dealt with. Otherwise they will condense into resistance. The following fears, among others, can lead to resistance during mergers:

  • Fear of loss of income,

  • Fear of losing a job,

  • Fear of new tasks,

  • Fear of losing important personal relationships (for example due to a transfer),

  • Fear of losing social prestige,

  • Fear of losing room for maneuver and decision-making powers and

  • Fear of reduced development / career opportunities.

As a rule, these fears become greater the longer the employee does not know: What is in store for me? Therefore, management should answer these questions as soon as possible. Otherwise the rumor mill will start to simmer and the change process associated with the merger will appear in an increasingly negative light for the employees. That is why even people oppose him who are in fact among the winners.

Cannot be planned in detail

Many managers are convinced: We should only inform the employees when everything is "in the towel" and is certain once and for all - otherwise we will create uncertainty. Accordingly, they are often reluctant to provide information to employees. At the latest, the employees are put in a mood of alarm when, at least in the case of listed companies, due to the existing information obligation, the first reports of a possible merger are in the press.

In addition, fusion processes cannot be planned in detail. Many decisions are of a provisional nature - also because not all influencing factors and interactions can be precisely recorded. In addition, the company and its management often break new ground in mergers and acquisitions. So they have little or no practical experience with this. Therefore, the fear of providing incorrect or incomplete information often means that those concerned receive almost no official information. This information vacuum feeds rumors and half-truths, which in turn fuel fears. Therefore, a communication concept should be drawn up in advance of every (planned) merger - with the following goals:

1. Create an understanding of the necessity of the merger,

2. Build trust for the related decisions,

3. Generate acceptance among employees,

4. Generate motivation for the individual steps and

5. Create the basis for identifying with the new company.

Every company has its own history and culture. When two companies merge, a fight usually breaks out over the new mission statement. If this process is not controlled, this usually wins the acquiring company, even if a "marriage of equals" is officially announced. The acquirer thus dominates the acquired company. This increases the resentment of its employees, which leads to unnecessary resistance. It is therefore advisable to carry out an analysis in the case of mergers as to which elements in the cultures of the two companies promote the achievement of goals and should therefore flow into the new culture.

When trying to change a corporate culture, top management plays a key role. It has to exemplify the new culture. Any attempt to bring about cultural changes solely through middle management fails. The lengthy process of cultural change should also not be underestimated. They usually last at least 3 years.

Saying goodbye takes time

Larger companies invest a lot of time and money in building a corporate identity, i.e. a company culture. Because employees should be proud of "their company" and identify with it. In the event of a merger, however - especially in the case of the company being taken over - this identity is lost. Many employees, especially those who identify strongly with him, find it difficult to say goodbye to the previous company with its customs and rituals. You mourn. In private life we ‚Äč‚Äčtake it for granted: Saying goodbye takes time and can hardly be forced. In the corporate context, there is usually little understanding of this. Temporarily lethargic and sometimes even aggressive behavior is rarely interpreted and respected as an expression of grief.

The following graphic shows how the process of loosening takes place and that people can usually only form a new bond when the old one is "digested". This must be taken into account when planning integration processes.

Certain non-partisanship

In the case of mergers, the employees often live in a "limbo" until the transition to the new structure. What's next? What will happen to me Will my job still exist afterwards? Such questions move them. In this situation, employees often show the following behavioral patterns:

Service according to regulations: You no longer identify with the company, only work according to regulations or only follow the instructions of your superiors to a limited extent.

Operational hectic: you lapse into actionism. Countless projects are generated. Employees want to be involved everywhere in order to appear in a good light. Not the quality of the work that counts "show up".

It is therefore important that top management offers the managers in the organization in particular an orientation during the transition period so that they know how to behave. Otherwise a lot of energy will be ineffective.

In the case of mergers, many momentous decisions are usually made in a short period of time - for example about IT systems, staffing, market and product strategies. Often it is not the better one that prevails, but the concept of the takeover. Fields are occupied and territories redistributed, whereby self-interests also play a major role. Therefore, the top management should pay attention to a certain impartiality, so that, especially in the acquired company, no unnecessary losers are produced that block the process.

Mergers are difficult business - also because the real work only begins after the contract has been signed and the merger has been announced. Business leaders need to be aware that successful integration does not come for free. In the months and years after the merger was announced, the company must invest a lot of energy in shaping this process. In addition, this process should be professionally controlled and accompanied by external experts - also to ensure that the three aspects of strategy, structure and culture, which mutually influence each other, are always taken into account in the (follow-up) decisions.