A flurry of deals and take-overs last week meant that global mergers and acquisitions hit a record high of over $4.3 trillion in 2015 (predicted to be nearer $4.7 trillion by the end of 2015), beating an earlier record in 2007, the Wall Street Journal reported.
Investor pressure to find ways around the slow economy, cheap interest rates as well as a desire to relocate to lower tax rate locations has driven companies’ decisions to consolidate during the past year.
Mergers and acquisitions, well conceived and properly executed, can deliver greater value than ever right now. However, about a third of all mergers & acquisitions fail and it all comes down to managing the process and your people.
In the immediate aftermath of an acquisition or merger, productivity can fall by as much as 40%. To ensure this doesn’t happen, we advise and support our clients to deliver the steps to successful M&A integration:
• Plan a smooth integration process
Structure the integration process around the key sources of value and translate these into tangible results that everyone in the company can understand. If teams understand the value for which they are accountable and see their value to the business – they will be motivated to deliver value from the start.
• Commit to one culture
Commit to the culture you want to see emerge from the integration, talk about it and put it into practice. All executives from the CEO down need to manage the culture actively. Design benefits systems to reward the behaviors you are trying to encourage and create an organisational structure and decision-making principles that are consistent with the desired culture.
• Select the right leaders for success
The new organization should be designed around the new vision for the combined company. Endaba help businesses evaluate the capability of the leadership team to deliver in the long term, ideally selecting people from both organisations as well as looking externally where needed, who are enthusiastic about the vision and can contribute the most to it. The sooner you select the new ‘right’ leaders, the quicker you can fill in the levels below them, and the faster you can fight the flight of talent.
• Compose the right teams with the right capabilities
Endaba help business extract synergies and compose new teams with the right capabilities and motivation. The company’s leaders should consider carefully the fit with the new culture in making decisions about which people to keep.
• Coach your leaders to handle the change and drive productivity
If properly integrated into their new roles within the new business culture, leaders will be ready from day one. We help prepare your leaders to handle the inevitable changes ahead with confidence, ensuring they become high-performing, integrated team members and effective leaders as quickly as possible.
‘’Seamless integration saves money, time and frustration and protects you from losing valuable talent and the ultimate risk of failure. With the right people in the right places, and with the right support, we can ensure a successful start and outcome for your new merger or acquisition’’
Patrick Egan, Managing Director Endaba.