Congratulations – the deal is done! You have successfully acquired a new business to complement and/or grow your existing business.
Or have you?
To be a successful merger or acquisition, the new combined business needs to keep performing at the targeted level. To achieve this, the people in both businesses need to deliver, the cultures need to be melded together, and all team members need to align in their purpose. On the other hand, if your people are dysfunctional then your business will be too.
Setting values for teams is important to achieve clarity of purpose. Immediately after the merger or acquisition, you will likely have two teams with two sets of values that may be closely aligned but not completely.
Part of your post-acquisition role is to review both sets of values and determine whether your existing values should change to absorb some of the acquired business’ values, or if they should remain the same. In either case, the next step is to educate and indoctrinate your staff into these values to ensure that their purpose is aligned with your business.
Managing culture is one of the greatest challenges for business owners. It’s not easy to change and it takes time. That is why when you do your due diligence, you invest time exploring the culture of your acquisition to ensure it was complementary to that of your existing business.
It doesn’t stop there though. Now your task is to work with your people to smooth out the differences between the two cultures, moulding them into one homogenous culture that is suitable for the requirements of the new combined business. If this is not on track, you will end up with two opposing groups of people working at odds with one another, sabotaging the business, and being a time and productivity vampire.
Another thing you would have reviewed in your due diligence is the HOW of your business. Following the merger, you’ll have two groups of people with two different ways of doing things in your business. It’s time to see which parts you want to retain and which parts you want to change, choosing the best of both businesses to create a new and improved process.
If the acquisition was instead deepening your supply chain, then the part that you’ll be working on is the integration of the process from one stage of the supply chain to the next. Then the task is to retrain your people to follow the new process and to forget the older and less productive ways they are used to doing things.
This dovetails in with cultural change and it is important to do this in a way that doesn’t leave staff feeling like they are “doing things the wrong way” or that “the other team are better or more favoured than we are”. Much of this retraining is motivational as much as technical.
So far, aside from the impact on your business values, the previously mentioned components may have been hidden from your customers. Branding, however, is the last component to be managed, and this is one that your customers see all the time.
Before you had one brand; now you have two. How do they work together, or do they stay as two distinct brands but are supported by the same back-end supply chain that you own?
Are you Rebel Sport acquiring A-Mart All Sports and integrating one into the other, or are you one retaining two distinct brands operating in different market segments, such as Qantas and JetStar?
Whatever the case, there will be implications that flow from your branding back into your culture, training, and processes. This may require you to retain two parallel sets to suit the differences in brands. This is not necessarily a bad thing, but it does mean that you will not be able to achieve the same economies of scale possible with a single brand. For more information on branding considerations for mergers or acquisitions, we suggest reading this blog.
It is often said that people make a business. However, if these people don’t have a clear understanding of the vision, a healthy business culture aligned with the values, and good, efficient processes and branding then the result is usually catastrophic. Getting this right is essential to ensure a successful merger or acquisition.