Selby Group | Five Completely False Acquisition Assumptions to Let Go of Today
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Five Completely False Acquisition Assumptions to Let Go of Today

Five Completely False Acquisition Assumptions to Let Go of Today

Is there such a thing as acquisition season? It seems that I have been in a lot of conversations about potential, pending, and actual acquisitions since the weather started to turn warmer. Even though acquisitions are more common than many people think, they are still notoriously tricky to pull off.

Leaders often begin an acquisition integration process by using the same methods that made them so successful in leading their organization on a day-to-day basis. Unfortunately, this just doesn’t work well for acquisitions, because an acquisition can be a big change, and change means you need to change many of your underlying assumptions.

In fact, you may need to change your assumptions about everything from long-standing customer and competitor relationships to who are your partners in the supply chain and what are the employees’ daily job responsibilities. The trick, of course, is not in the acquisition itself, but in the effective integration of the acquisition into the business.

Let’s review five of the most common deadly assumptions well-meaning leaders make about acquisitions, and what you can do to accelerate the integration process and produce a better and more synergistic integration.

1. Effective acquisition communication means close attention to messaging.” Depending on its size and scope, an acquisition can be a small change or an enormous one. The tendency is for leaders to make announcements and think they’re communicating, and to focus on what they say and not on what they hear.The most successful large-scale changes involve a two-way process, and it’s given the respect it deserves by being at least somewhat formalized and measured for its contribution to the success of the change.  It’s certainly a lot more than saying to managers, “So, how are your people doing? Everyone’s o.k., right? Great! Be sure to announce the latest acquisition updates at your next staff meeting.”

To get a better result and accelerate communication, set up a process for ensuring that concerns are raised through the hierarchy and addressed. Think there’s no hierarchy in the way? Think again. Trust me — I only hear that statement from people who are at the top of the heap, and virtually never from individual contributors. That’s not just a deadly assumption related to acquisitions – that one will kill you over time under any circumstance.

No matter how approachable you are, a medium or large acquisition is simply too big of a change to trust to strictly informal channels. If you’re communicating effectively during an acquisition, you are listening exponentially more than you are messaging, and you are not formulating your next thought while the employee is talking – you’re truly hearing and absorbing what he or she is saying.

2. With a few months of long hours, we can integrate people, processes, and systems.”  Most of your good and excellent people are already putting in long hours, and let’s be realistic — getting more hours from the weak performers isn’t going to help much, is it?Underestimating how much additional resource is needed for the integration is deadly because it creates drag on the organization as the integration misses deadlines and managers have to spend more and more time re-scoping the integration efforts in addition to doing their day jobs.

This can also create drag in the emotional mindset of frustrated and confused customers, dispirited employees, and angry partners. It takes a lot of courage, persistence, and tenacity to create and sustain a strong integration plan. Because the habit of most organizations is the habit of day-to-day operations, it takes serious effort to infuse the very different practices involved in managing a big change like an acquisition.

I’ve seen few successful acquisitions without a dedicated integration team, with the exception of very small ones with only a few employees. You’ll likely need dedicated resources in IT, a working group to integrate different business models and processes, and of course, the facilities and HR teams. You can begin moving in the right direction today by assessing the quality of the current plan and the resources in these areas. Hire an outside expert with amazing results in integrating processes and systems. I’ll help you get the people there, but you will need other experts to help you scope and execute processes and systems.

3. Better to reorganize slowly and in small pieces rather than upset the apple cart.”  There may be good business reasons for it, but never do a post-acquisition reorganization in bits and pieces on the assumption that it will ease people into the change.It’s a difficult truth, but some people may lose their jobs and if you need to make these cuts, it’s better to get on with the job. When leaders prolong confusing, duplicate, and overlapping roles, or lay off employees in seemingly random one’s and two’s, they increase cynicism, frustration, and the fear that the acquiring organization’s leaders are an inept, indecisive group of bureaucrats who can’t make up their minds.

The decision to let people go is so painful and exhausting for everyone involved (even me, and I’m just the outside consultant), but leaders must bite the bullet. If a reorganization is focused and takes weeks, not months, or as few months as is reasonable, the remaining employees at least will be able to focus on their work instead of wondering when the ax will fall.

4. Spin it up – we’ve got to keep people positive.”  Sure, everyone wants to follow an optimistic leader, and you should share all good news with great joy — but that doesn’t mean putting a positive spin on negative developments. You will kill your credibility, particularly among the employees of the acquired organization, most of whom have no relationship with you, and therefore no particular reason to trust you in the first place.Be honest, and share your plan to address the issues, or at least your timeline for pulling a plan together. Your people are living day-to-day with the consequences of any negative developments. They’re probably the ones who brought the problems to someone’s attention in the first place, if you’ve implemented a solid two-way communication process. Show your respect for them by treating these challenges with honesty and compassion.
5. And from deep in our unconscious selves… “the employees of the acquired company are so darn lucky to be part of our company, and they need to just get aligned with the way we do things around here.”  These days few leaders are crass enough to say this out loud, but the fact that we don’t say it out loud in no way addresses the fact that we feel it, if that’s what we feel. Attitudes and emotions leak out all over the place.But reverse this attitude quickly if you see it in yourself or in someone else, because if the undertone set by the acquiring company’s leadership is in any way superior, the employees of the acquired company will pick it up and head toward to door to your competitor at the first opportunity. You’ll also lose out on all you could have learned from the employees who stay, because you’ve inadvertently demeaned their knowledge, skills, and expertise.

I recall the time I found myself sitting in the regional sales office of an acquiring company.  When the SVP of Sales announced the acquisition of their largest, closest competitor, the sales team cheered and yelled, “We win! We win!”

The acquisition turned out to be a stunning success, in part because the SVP responded, “Hey, cut it out, you guys. Each of these people is part of our team now. We’re in it together and frankly, I’ve seen their numbers and they’re every bit as good as you are. If they weren’t, we wouldn’t have acquired the company.”

Accelerating integration is no small task, but make sure you and your team chase off the five deadly assumptions, and you’ll begin to gain the momentum you need.

9 Comments
  • Aaron Anderson
    Posted at 14:08h, 09 April Reply

    I often ask my students when discussing mergers and acquisitions as to if there is any such thing as a real, clearly definable merger. The conclusion typically reached, after plumbing for answers a bit is; nope. They are all acquisitions, and by their nature involve quite a bit of change and even some transformation. There may be one or two anomalies where there has been a real merger of equals, but regardless what you call it, these transactions cause change. Moreover, change is painful.

    After reading your post, I’m left with two questions – one – how would communication be different if the top layers of the acquiring company be very, very (even painfully so) transparent and communicate using some social media platform like Yammer? Would this improve any number of the reigning myths?

    Two – Can we flip the acquisition model on its head for a change? Unlike the Oracle model – buy a company, raid the technology, then kill it – what if the Yammer example proves that acquiring a company should involve a healthy dose of learning from the acquired? Microsoft bought Yammer with much less fanfare than Facebook took over Instagram. But, if Microsoft opens up it’s cultural kernel like open-source software, could the infusion rather than the squashing of the Yammer culture permeate Microsoft and thereby improve it? After all, Microsoft bought Yammer for who they are….

    So, I’ve expanded your final point a bit, I hope. Remember the target was bought and brought on board for great value…unless, well, you might be Larry Ellison.s

  • admin
    Posted at 14:30h, 09 April Reply

    Brilliant. I’ve entered organizations after excellent “acquired talent” had left, and leaders were scratching their heads, truly unaware that they had demonstrated no interest in learning from the acquired. I wonder, too, how the more transparent and — dare I say “genuine” — nature of a social media platform would improve, or perhaps simply change, the experience.

  • Diane Valenti
    Posted at 10:56h, 10 April Reply

    Yes, yes, yes! I especially loved the point you made about under estimating the resources needed. This always seem to be one of the biggest sticking points for any kind of organizational change. I’ve seen people stretched and stressed beyond the breaking point and really great efforts become bogged down because of this short sightedness. It’s true for an M&A and it’s true for every truly significant change effort.

  • Diane Bisgeier
    Posted at 15:29h, 11 April Reply

    After managing employee communications at a large financial services firm I say, “hear hear” – particularly to:

    1) Building 2-way communications. “Top down” is never constructive for morale and leaves lots of room for various people to speculate and percolate opinions askew if they have no outlet to address their reactions with senior management. Having a designated outlet that is safe for people to air any concerns is critical – not just during the transition, but as an ongoing business practice.

    2) Keeping it real. “Spinning positive” – especially if it is spin – is easily spotted by employees immediately. Be candid about the challenges and enlist everyone to be a part of the solution.

  • admin
    Posted at 16:06h, 11 April Reply

    Great points, Diane and Diane. Thank you!

  • Sharon Richmond
    Posted at 10:45h, 18 April Reply

    Jennifer – Good points on all fronts. A few additional thoughts:

    SUPER SECRET STUFF – We all know how sensitive communications are during the due diligence phase, and such a belief in the importance of secrecy sometimes lingers after the deal is done. That causes harm to both sides – finding appropriate ways to ensure that both acquired and acquiring understand the expected value to be gained from the transaction increases the chance that folks can actually pull together to focus on ensuring that value capture.

    INTANGIBLES – one of the hardest things to evaluate in any such transaction is the ‘cultural value’ that has produced the hard value the acquiring organization is attracted to. Until you understand what makes the magic trick work, you shouldn’t mess around with the elements of it – or you can very well kill the magic. This may well contribute to the depressing statistics about how many mergers actually yield shareholder value, post their ‘integration.’

    KINDNESS – the folks who are crunching the numbers, burning the midnight oil and fighting to get the deal ‘done’ are usually pretty high-strung and intense folks. Kindness and human scale interaction is not always their strongest suit. Systematically devaluing the human beings involved, and their concerns and needs, is almost guaranteed to trap all kinds of value inside their heads and hearts. Why would people who feel disrespected share with you their hard-learned knowledge? So it’s worth amping up the empathy factor, and showing more kindness than is “necessary” especially in the early days. People must feel part of “us” before they will join in. Listen to the language of ‘them’ that pervades many acquisition integration teams – and you can answer your own questions about why we lose value the minute we drive the acquisition ‘off the lot.’

    Thanks for starting this really important conversation, Jennifer!

  • Jennifer Selby Long
    Posted at 11:03h, 18 April Reply

    You’re welcome, and thank YOU for the additions and reminders.

  • Don Proctor
    Posted at 10:15h, 22 April Reply

    It’s sometimes easy for companies to forget the human aspect of acquisition integration. Retaining top talent is often key to making the acquisition successful in the long run. Percentage of top talent retained should be an important success metric for any acquisition.

    Large and mid-sized acquisitions can also enrich the culture of the acquiring company. For example, Cisco’s acquisition of Stratacom in 1996 brought with it a culture of RAS–Reliability, Availability, and Serviceability–that is critical to success in the service provider market. Companies who recognize the value of integrating, not assimilating, the culture of the acquired company will see a higher return for their M&A investment.

  • Jennifer Selby Long
    Posted at 10:33h, 22 April Reply

    “Integrating, not assimilating, the culture of the acquired company” — I’ve never heard it put quite that way, but it really hits the nail on the head. The Stratacom acquisition really did enrich Cisco because there were curious leaders on the Cisco side wanting to absorb, not just share, and Stratacom leaders open to sharing, not maintaining an isolated insider’s club.

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