Mergers & Postmerger integration
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Merger

Two Make One Make Two

Are you currently focusing on inorganic growth with your company? Then you know all the opportunities, hurdles and aftermaths that arise in connection with acquisitions or joint ventures. We are often called upon to accompany companies in the post-merger integration (PMI) phase.

The integration of an organization is a complicated and multi-layered process. From the choice of the appropriate merger strategy to contract negotiations and the actual merger, many decisions have to be made.

The track record of mergers is rather sobering. Various studies of the last decade have come to the conclusion that about half of all mergers fail or that the successes realized fall far short of expectations.

The biggest hurdle? The search for relevant success factors increasingly leads to the realization that all value creation through M&A occurs primarily after an acquisition. However, most managers underestimate the pitfalls of the integration process, especially at the cultural level. A merger can cause irritation on both sides. Uncertainties and fears often arise, and there can be conflicts at management level. Processes do not run smoothly, knowledge is not shared, the common direction is not clear and leads to conflicting goals among employees and departments.

Buying a company is relatively easy, but integrating it or making both parts into something new, harmonizing cultures and making processes cross-functional, is all the more complicated.

Successfully accompany mergers

Takeovers and restrictions shaken up the view of employees and in most times trigger uncertainty, fear and even loss of identification. Even though the Management often has a different view, there is always a "loss" in addition to "win" - or at least people who see themselves as such, because of the uncertainty in the merger process. All fears among employees must be addressed by the Leadership and Management. Otherwise, they will condense into resistance and become insurmountable hurdles in the merger process.

What do affected people fear?

  • Loss of income, job loss
  • New tasks (excessive demands)
  • Loss of important personal relationships (for example, due to a transfer)
  • Loss of social prestige
  • Freedom to act and decision-making
  • Less development/career opportunities

All fears usually increase when employees do not know: What is in store for me; am I a loser or not? Therefore, Management must take action upon this question as soon as possible. Otherwise, rumors will take the change process associated with the merger in a very poor light for employees. In case of doubt, even people who are actually among its winners will oppose the merger.

Employees often live in a state of uncertainty ,when it comes to merging, until the transition of the new structure: What happens next? Who will I become? Will my job still exist in the future?

Many Managers are convinced, that employees shall only be informed when all decisions have been taken once and for all. Otherwise it could create uncertainty. Accordingly, Managers could be reluctant to provide information to employees. Especially in case of listed companies, they are in alarming mode for the first reports start to circulate in the press as a result of the existing duty to inform.

In addition, anyone who believes they can plan merger processes down to the last detail, is under an illusion. Many decisions have a provisional character - because not all influencing factors and interactions can be precisely recorded. In addition, the company and its Management often enter uncharted territory when it comes to merging's and acquisitions. They have little or no experience at all. The concern about providing incorrect or incomplete information often leads no official information. This creates an information vacuum that feeds rumors, which might turn into fear.

In mergers, employees often live in a state of uncertainty until the transition to the new structure: What happens next? What will become of me? Will my job still exist in the future? In such situations, employees often exhibit the following behavioral patterns:

  • Operational hectic: Employees fall into actionist. Countless projects are being started. Everyone wants to be involved everywhere possible in order to appear in a favorable light. It's not the quality of work that counts, but the way they present themselves to their superiors.
  • Duty by the book: They no longer identify with the company, only do what is necessary and only follow the instructions of their superiors to a limited extent.

That is why it is important for top managers to provide their executives with orientation during the transition period, I order to know how to act. Without this orientation a lot of energy is wasted with no effect.

Therefore it is important: In the run-up to every merging, a communication concept should be drawn up in addition to a decision on a merger strategy. With following objectives:

  • Create understanding of the need for the merging
  • Build trust in the associated decisions and transformation
  • Generate acceptance among employees
  • Generate motivation for the individual steps
  • And thereby create the basis for identification with the new company.
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Companies have recognized the need for brand management in the context of merging and invest a great deal of time and money in holistic brand development in the sense of a corporate (brand) identity.

From an internal perspective, the behavior of the Management and targeted changes to the corporate culture, both play a major role. Employees should be proud of their company and identify with it. However, in case of a merging- especially in the case of the an acquired company - this identity is lost. In particular, employees who have strongly identified with the customs and rituals of their company find it difficult to say goodbye.

The task of internal brand management in the context of merging is to anchor the values of a newly formulated brand identity within the corporate culture and in the feelings, thoughts and actions of Managers and employees in order to provide orientation, overcome interface problems and serve as a new basis for identification and motivation.

Through a series of targeted measures, we help you transform existing and new employees into convinced contributors and authentic brand ambassadors. Your company will face clear messages, adapted structures, clarified responsibilities, defined brand identities - and the integration of the new team into the company as well as different teams. We would be happy to discuss all these issues with you personally.

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