The importance of human due diligence is vastly underestimated in pre and post-acquisition activity. Failure to thoroughly do so is the primary contributor to two-thirds of newly-blended companies losing market share in the first quarter after the deal. Culture clashes, misaligned processes, confused employees and lost productivity are common occurrences that weaken the structure, brand, customer relationships, ability to innovate and morale of employees, offsetting or eliminating anticipated gains. Even the best organizations can get stuck in neutral when executing new company standards, or miscalculate the stamina required to bring about quick, effective and sustainable change.
All reasons not to try going it alone. Very talented and capable executives are caught off-guard by the many human complexities of integration, but a focused contracted expert not hindered by the demands of running the business can be one of the acquisition's greatest assets. As a neutral third party, the expert can change the "we" and "they" to "us" quickly and beyond the rhetoric, help navigate through the pain of hard decisions with clear-eyed rationale, provide objective insight and feedback on where the organization is stuck, and diplomatically work through difficult political and interpersonal issues from a base of industry knowledge that aligns the new company with the needs of the market.
Assuming business integration mechanics are in place or scheduled, Blueberry’s experience suggests a few additional key steps:
- Priority #1 is to protect business. Competitors are aware of acquisition turmoil and may be quick to swoop in to leverage their relatively-stable position with your accounts, so make sure customers are contacted (by a neutral party, not someone on the payroll) to gain insight into how the acquisition is perceived and whether any business is at risk.
- A clear understanding of the purpose and implication of the acquisition helps define the new organizational culture and its goals, which is an important factor in communicating to employees and customers. Caution: Over-statements and commitments are common during deal-heat; back up what you claim to be, right now.
- A false assumption is that the adopted culture is always the one of the acquiring company, but the financial acquirer may not necessarily be the one setting the tone for the new organization. Again, the purpose of the deal points the way here and in other business considerations.
- Management from both entities will fight to retain their position. Individual styles, skills gaps, business philosophies, ideas about organizational structure and other business issues should be assessed carefully but quickly and efficiently in order to make decisions that prevent a ground swell of misunderstanding. If not, the pattern will be repeated in the ranks and the business will suffer.
- Skills must be separate from personality and tenure when considering the future needs of the company. While an obvious statement, its surprising how often these personal factors blur decisions.
- Don’t assume the acquirer’s resources are better or more advantageous than those of the acquired company. Tread carefully when discarding long-standing processes that may be outdated and no longer valuable in the new model—expecting people to discard and replace what they have spent years creating can generate negative undercurrents and opposing camps that can linger for years and disrupt business.
- Finally—and very importantly—dig deep and objectively into human issues at the top and throughout the ranks to uncover reaction patterns to change: Areas of friction or conflict, rumors, trust levels, resistance, bottlenecks that slow down workflow, how communication and direction is received and carried out, decision-making methods, perceived authority thresholds and who’s in the dark. These are the messy areas that derail progress in bringing the two entities together and should not be overlooked.
