Top 10 Reasons Mergers and Acquisitions Fail
Lack of Urgency – Now, while the parties to a merger or acquisition cannot exchange commercially sensitive information prior to being under common ownership, there is more than enough critically important, legally permissible prep work to keep an integration team occupied for a few months before day one. However, the majority of chief executives are unaware of this and wait for clearance from the regulatory authorities. Speed is essential in the M&A game.
No Common Vision – If there is no clear statement of intent of what the merged company will stand for, how the company will operate and what will change, then there is simply no point of convergence on the horizon and the organisations will never blend.
Nasty Surprises – As a result of poor due diligence, nasty and unwanted surprises can pop up and as basic as it sounds it is something that occurs all too often.
Team Resourcing – Resource requirements are frequently overlooked and underestimated. It can take up to three months to release the best players from day to day business to join the integration team/teams, find a backfill for them, sign up contractors to plug the gaps and create the team’s infrastructure. Companies for the most part start too late and are not ready once the deal is finished.
Poor Governance – A lack of clarity as to who makes decisions and no clear issue resolution process. Integrating organisations brings up a myriad of issues that need a quick resolution or else the project comes to a halt. Once again, speed matters but in harmony with a sound decision-making process.
Poor Communication – Messages too often lack relevance to their target audience and frequently hover at the strategic level when what employees want to know is why the company is merging, why a merger is the best course of action it could take, in what way the company will be better after the merger, how it will ‘feel’, what affect the merger will have to their work and what support they will receive if the process has an adverse effect.
Poor Programme Management – Insufficiently detailed implementation plans and failure to identify key interdependencies between numerous work streams brings projects to a standstill, or requires pricey rework, extending the integration timeline and causing frustration.
Lack Of Courage – Delaying some of the hard decisions that are necessary to integrate two companies can only result in a disappointing outcome. Making such decisions will not make everyone happy but it has the advantage of clarity and honesty, which allows those who don’t find the journey and final destination appealing to step off before the train gathers too much speed.
Weak/Poor Leadership – Integrating two businesses is like sailing through a storm. A strong captain is needed, as well as an individual who everyone can trust to deliver their ship to its destination. Someone who projects energy, enthusiasm and clarity to everyone that they communicate with. If senior manager’s behaviours and ways of working, do not go hand in hand with their vision that the company aspires to then all credibility is lost and the merger’s objective is reduced to meaningless words.
Lost Baby With Bathwater – Companies toying with the idea of a merger or acquisition too often omit to pinpoint what particular attributes make the other party appealing and to define how they will make sure those attributes will not get lost when the organisation and the culture have altered. Culture cannot be bought, it must be embraced.