The perfect storm is here, combining a disruptive political and economic environment, a generational workplace shift and incredibly quick transformations in technology. Businesses are struggling to keep up with the changes they need to make within the time frame they need to make them.
One result of this storm is that companies are more often considering whether they should merge with another business. When done properly, mergers can lead to the newly combined company having a stronger market presence.
The key is to pay attention to details when performing due diligence: You have to look deeper than the financials to see whether the new company will have the people and culture to make it successful.
Assessing culture, systems and personnel
Begin by taking the time you need to ensure the two cultures are compatible. Consider these potential scenarios:
- Suppose the target company has five different locations, but each staff person is assigned to only one. However, the acquiring company requires staff to have both a primary location and the ability to shift between offices as needed. Ignoring this kind of difference is not a good option. Instead, find a solution to ease the difference. For example, the target company’s existing staff can be grandfathered in at one location or choose to commute between offices. Only new employees of the combined entity would have to go between offices.
- Imagine that the acquiring company has a policy that requires staff to be on-site two days a week, but the target company is fully remote. This difference could be solved by careful advance communication in which company leaders announce that as of the date of the merger, everyone will be required to be in the office two days a week.
These are just two examples of how day-to-day business operations can affect the merger. Equally important to these cultural questions are ones of benefits, perks and processes, which all need to be evaluated so the best can be kept and specifically stated in the merged company’s handbook. The evaluation should be undertaken with an open mind. The acquired company may have a better policy in any given area.
It’s also important to review personnel, facilities, equipment and so on for duplications and compatibility. Hold these reviews and discussions as early as possible in the merger talks. For example:
- How will duplicate titles (e.g., C-suite, practice leaders) be handled? How will the person who stays be chosen? Will people be offered buyouts? Are any high-level personnel likely to leave because of the merger?
- Who will be responsible for drafting the new company handbook?
- If there will be layoffs, what package will be offered?
- Which company’s software, systems and processes are more effective? Which allows greater productivity? Once a determination is made on which to use, the conversation should turn to data transfer and training.
- Will a move to another city or state be part of the deal? If so, will all staff be offered the opportunity to move with the company?
Finalizing the change
Once the decision is made to proceed with the merger, company leaders need to assign a unified team, drawn from all divisions of the company, to develop a detailed checklist of critical tasks (e.g., data transfer and training) and to create a timeline for how the integration processes will move forward. Working with marketing and sales, company leaders are responsible for communicating that there will be a merger and then for providing updates on how it is proceeding. It is to everyone’s benefit to inform and reassure customers, outlining how the merger creates a stronger company for them.
Undertaking these tasks with purpose and direction will help ensure the merger goes as smoothly as possible with a minimum of surprises.