Now that you’ve sold your company, or are about to sell, what can you expect? Whether you’re on your first acquisition or after multiple acquisitions, each deal has its own tenets and vision for shareholder value and profitability. Integrating companies is one part of the mergers and acquisitions process, that, more often than not, represents the greatest challenges. Some acquisition challenges you may experience include:
- Understanding your company is no longer just your own
- Loss of customers/clients due to perceived changes
- Cultural issues causing employee retention problems
- Lack of transparent communication
- Identification of redundancies and employee terminations
- Determining a forward-moving plan for leadership to implement
- Driving efficiencies
- Implementing desired changes
Ways to avoid pitfalls include:
- Transparency, identification, and early communication of the integration priorities and objectives to staff
- Keeping your focus on customers/clients and advising them about the benefits of your acquisition
- Create an integration plan including an assessment of resources, identify any shortfalls
- Define a culture that can be adopted across the merged organization
- Engage at every level — consistent communication is key to driving awareness and accountability
- Be prepared to make some tough decisions
Mergers and acquisitions are something that most small and medium companies typically embrace after building a solid foundation and profitable business model. It’s the ultimate badge of a successful entrepreneur. I’ve sold my company three times and have acquired more than 20 companies to date. I can honestly say that I have walked away from deals on both sides because thinking and culture was not a fit. For both sides it’s like a marriage, and you need to be able to live and grow with it successfully.
Unification Versus Fragmentation
So, you’ve created a solid plan for doing the deal and have made sure all parties are in accord in moving forward. Even in the very best merger situations, company culture will need to be addressed and will require integration, which involves combining the values of more than just your company.
There is a definite need to create a shared organizational culture, which incorporates your company’s local culture and context. Organizational culture involves shared behaviors and processes that have developed over time. Organizational culture needs to be fully understood before the deal is done and is due diligence on your part. It’s what has become the lifeblood and flow for the parent organization. Make sure you have asked all the right questions and that you are joining an organization that reflects much of your own thinking. You will need a plan to navigate and integrate the organizational culture within your company.
Oftentimes within the automotive industry, companies are family owned, some even being passed down over several generations. The local culture is deeply rooted and translates across social and economic plains. Organizational culture will never replace the culture within your company. However, there is an opportunity to synchronize the two, essentially providing a great balance and the best of both worlds. Not doing so leaves your company open to developing an unwanted “us versus them” mentality.
Keep Employees Engaged Through the Process
An acquisition isn’t something that should be a surprise to your employees. As rumors always do, they spread, and the last thing you want to manage, in addition to an acquisition transfer, is a mass exodus of employees who heard a rumor that made them anxious or want to leave. Don’t overlook the people side of acquisitions. You want to retain pivotal talent.
In a successful transition, you will need to communicate openly and frequently. The most successful merger transitions are those that are from the bottom up, not top down. Teams of people who have been strangers now have to learn to cooperate and work closely together. They need to be set up for success not failure, and they need to have the same integrated values and attitudes. This is where the cultures need to harmonize.
The most frequent question employees have is “What does this change mean to me?” You can prepare for this and other questions by developing an FAQ document to share. Keep employees informed along the way regarding the progress of the merger. Give them insights as what to expect and when.
You will need to address your employees about the benefits of the acquisition and explain as best you can, in detail, any changes that may come about as a result. Being upfront and honest will build on their loyalty and making them feel as if they are essential for a successful acquisition is important. It will also be important for your executives and managers to feel part of the merger acquisition process. If your managers are not feeling accountable, and are feeling uncertain, their direct reports will follow suit. Create and share a transition plan that shows the unification of the parent organization, the cultures, objectives, and goals.
And most importantly, stay positive, energized, and optimistic.
James Polley is CEO of Spectrum Automotive Holdings.