Doug Baird, CEO of people advisory firm New Street Consulting Group who helps you find, assess, build and accelerate teams and leaders.
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A bright outlook for Mergers and Acquisitions (M&As) is inspiring ambition among CEOs, business owners and shareholders. After a slowdown of M&As in 2023, finance and investment banking powerhouses are predicting a rebound this year and into 2025. This rally could be driven by pent-up demand for deals, improving economic conditions and strategic needs for businesses to evolve.
Over the coming months, many boardroom conversations will become charged with the opportunities and challenges of hashing out deals, but while getting a deal over the finish line can be exhilarating, signing on the line is just the start of the journey. I've found that it's important to retain a long-term view of integrating different entities if you want to maximize value and sustain returns. Bringing together two new teams and successfully integrating them into one high-performing organization in the fullness of time requires careful consideration of your people, proposition and processes.
Based on my experiences with acquisitions made by my own company, here are some steps that can help ensure a successful integration.
1. Provide clarity and retain impetus.
Change can create uncertainty within teams and, in the wake of a transaction, is something you'll likely need to get ahead of. People will want to know what is changing, why and how, along with what’s staying the same. They will likely be keen to know how their role will evolve. In my experience, a lack of clarity can lead to second-guessing and assumptions and feed apathy to change. Leaders can’t allow this to fester or risk slowing the forward momentum that an M&A should bring.
Start with clear and proactive communication from the outset. Even if all the decisions haven’t been made about how processes, team structures and strategies may adapt, it’s important to manage your team's expectations. Employees and other stakeholders typically won’t expect all the answers but will appreciate being kept in the loop along the way. This can help you maintain the momentum and excitement of the deal.
2. Build value.
It’s important to look at the coming together of teams, processes and propositions from different organizations through fresh eyes. This can be a particular challenge during a takeover when an acquiring business believes the new entity is joining it. Sometimes, one organization is absorbed into the other too quickly, eroding the value that the merger or acquisition is meant to deliver.
An agile integration strategy can help you create opportunities to find synergies and promote objectivity. All parties should be willing to learn from each other and open to the possibilities of change. In my experience, this can challenge conventional ways of working and thinking and drive value creation. It helps ensure that strengths aren’t overlooked and lost and that the integration doesn’t wrongly retrofit one business into another.
3. Find the keys to momentum.
Break down the key elements of the acquisition process that will most likely define your success going forward, then work to take each of those stages at pace. Start by thinking about how you can keep the engine room of the business working as effectively as possible. Getting this right can encourage cultural alignment and inform how other elements are affected by the integration, from team structure and employer value proposition to branding and go-to-market strategies. I have found that a staged strategy can lead to better decision-making and the minimizing of mistakes, helping to ensure that your teams' effort and energy are invested in the right places to maximize a return.
Most importantly of all, a staged approach and an agile integration strategy can help you remain focused on the opportunity to build a new organization that is a force to be reckoned with rather than simply bolting one business onto another. This can help keep you from losing sight of the strengths that fueled the deal in the first place.
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