The 3 C’s of M & A

October 23, 2020

The definition of insanity is doing the same thing over and over again and expecting different results.” Albert Einstein’s wise words provide the necessary advice to flip the trend of mergers & acquisitions (M&A) success. Between 70% and 90% of mergers and acquisitions fail because companies intuitively approach them the same way over and over. However, Investis Digital CEO Don Scales has successfully spearheaded over 40 M & A deals, explaining that you can defy the odds if you change the way you strategize. Companies need to prioritize three pivotal elements to reverse the pattern of failures and set their companies up for shared success: culture, communications, and confidence.

1. Cultivate culture.

When company’s do retrospectives on what went wrong in mergers, culture is predominantly cited as the primary issue, time and time again. Yet culture is often initially overlooked among the countless considerations that go into a successful merger or acquisition. Leaders frequently emphasize financial and strategic fit alone because these areas are quantifiable and directly tied to monetary gain. Ironically, financial gain isn’t possible without cultural compatibility, alignment of values, or a shared vision. Cultural fit is critical; it is the only way to unite teams, achieve shared goals, and create sustainable success.

So, make your values measurable. Expand your due diligence to evaluate your alignment. Establish your chief differentiators– the guiding principles that influence your organization’s culture and decisions. Analyze the personalities and processes that make up your culture and compare them to those of your potential partner.  Use your core beliefs to create a values checklist or culture-based decision-making criteria by which you can determine the merits of the deal from a cultural standpoint. Measure your unity to the best of your ability before you move forward.The process is arduous, but essential:

  • Assess – Identify the individual beliefs of your key team members.
  • Articulate – Combine your individual beliefs into codified shared values.
  • Activate – Live your values through your culture, decisions, and actions.
  • Appraise – Utilize your shared values to evaluate your partners.

2. Compose Communications

Beyond shared values, effective collaboration requires extensive internal and external communication. Now, the difference between successful and failed communication is targeting, timing, and transparency. Communicate in layers on a need-to-know basis with carefully articulated messages tailored to your audiences. Internally, begin with your innermost circle and then, slowly broaden your sphere of trust to include your employees, clients, and ultimately the press. The farther away from the deal you are, the more vital confidentiality is, and the closer you come to reaching an agreement, the more vital transparency becomes.

Both companies must align on a unified action plan to ensure cohesive communications and a seamless transition. By the end of the process, every manager, team member, and client on each side should be included and integrated. It’s essential that each partner informs their people intentionally at the appropriate time, and that both deliver a united message, which they shape together. Finally, the dialogue shouldn’t end with the deal. After an agreement is reached, continue communication with one another as well as your teams.

3. Create Confidence

When companies merge, positive perception and established trust are essential to successful collaboration. Leaders and teams alike need to earn one another’s confidence. Leadership requires confidence in their team’s adaptive abilities, as well as their partner’s capabilities to carry their weight. Furthermore, confidence in leadership’s ability to lead should be instilled in every executive and team member on each side. All need to be united around the merger to maintain employee satisfaction, enable peak performance, and ensure a successful transition. Share the opportunities that the change presents to minimize concerns about its risks. Empower your stakeholders and shareholders alike to eagerly take ownership of their role in the transformation.

To generate the necessary enthusiasm, leaders must share a united vision for the future. Authenticity is essential to earn the confidence of newfound partners, respective teams, and the world at large. Confidence is also where your culture and communications come together because when you communicate cultures that align, you create the confidence you need to defy the odds. It takes a different set of priorities to become a part of the 10% of mergers that succeed. Speak about more than financials alone. Inspire people on all sides at the ideal times with shared values, aligned cultures, and united visions– to turn your two organizations into one.

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