Why “People and Culture” Can Make Or Break Your M&A Deal
This is about culture and change, critical often forgotten components in the equation of Mergers and Acquisitions (M&A). Too often or should I say, all the time, the focus is on the Profit, rather than the People.
Please don’t stop reading this little book review if you’re not involved in M&As - whilst this book targets this market, it’s a useful handbook reminding you (or educating you) of the importance of incorporating people into any thinking or planning if you have any type of change on your mind about/for your organisation.
The key message is loud and clear: there is a distinctive difference from managing the technical aspects vs leading the people and cultural aspects of your business.
Sadly, we’re still witnessing management controlling their organisations as if it’s one big spreadsheet rather than leading people to inspire, influence and involve their people to make an impact. Likewise, we don't see enough businesses preparing their people, emotionally and with the skills, to tackle changes.
Linley Watson, Australia’s Authority on M&A Culture Integration has published this book, a useful tool, to create greater awareness of what mistakes to avoid and how to create more value and delivering better results by involving your people in times of change.
Get the highlighter out as I started on Page 1, Chapter 1! Culture is described as a manifestation of beliefs, values and behaviours of the people in an organisation. It drives what happens in organisations and is the main factor that differentiates one organisation from another. It is also why it is difficult to bring together different cultures in an M&A situation.
I participated in my first ‘merger’, please read ‘take over’ when I worked at the Commercial Banking Company of Sydney. I was working in the Melbourne head office and we were moved to the National Bank’s head office next door. We were put down the back of the department with no attempt made to make us feel welcome, let alone integrated. It was a great lesson in how ‘not to do it’ and set me up in my career and business of focusing on people first.
“If you don’t know how to assess culture and you don’t know the cultural fit, then you don’t understand the full cost of the acquisition.”
I was stunned with the statistics (from AON Hewitt) of the Top 10 Drivers of deal failures. 74% related to integration – almost half were ‘cultural’ issues. Too many people make assumptions about how people will perform, react and feel about change. What’s In It For Me (WIIFM), an oldie yet a Goldie, is one of the simple reminders of how communication with people/staff/teams is a powerful responsibility to keep everyone on board of the integration journey.
“Mergers are like marriages. They are the bringing together of two individuals. If you wouldn’t marry someone for the ‘operational efficiencies’ they offer in the running of a household, then why would you combine two companies with unique cultures and identities for that reason?” - Simon Sinek
Our poor CEOs and CFOs get a bad rap and rightly so when they measure the performance of their business and omit the cultural and engagement components. The ‘cultural capital’ can be your competitive advantage yet too many fail because they don’t grasp its power. This should be in your spreadsheet … at the top!
One key activity identified by Linley is the need for a Communication Strategy. Preparation is paramount; know what to say, to whom, by when etc and ensure you are clear, candid, compelling, consistent and constant. This is critical and will build confidence in the organisation and you.
My favourite support tool included in Linley's book are a list of questions which will stimulate the people and cultural conversation. For example: What's not acceptable behaviour and what are the consequences?
In addition to great research, Linley provides stories, models, anecdotes, tips and checklists to help you on your journey to make a success at your business merger or acquisition or, I believe, just any change you want to implement.
One of my clients was recently working on an acquisition. Given his strengths being in the numbers game, I gave him a copy of this book. Disappointingly, the board didn’t support the deal however, I am hoping that the book will help him in our leadership development work to become a more people focused CEO.
So, if you’re involved in a merger or acquisition, or just want to unite your people and culture, visit www.macultureintegration.com.au to get a free copy of the book, or connect directly with Linley Watson.