There can be many reasons for company transformations - one important one is mergers & acquisitions, or M&A for short. When companies merge, two cultures, processes and structures need to be united under one roof, a common culture needs to be created and workflows need to be integrated. Not an easy challenge for management. In his contribution to the anthology "The Enterprise Transformation Cycle" with M&A and its prerequisites for success.

M&A processes often fail in the post-merger integration phase

Katja Heumader: Your article makes it clear that although companies often manage the merger well, there are still problems after the M&A. What is the reason for this?

Uwe Rörig: There is often little or no preparation for integration, and the harmonization of processes and IT systems is underestimated. The Diversity of corporate culturespossibly of two former competitors, is given too little consideration in the integration process. Corporate cultures can be noticeably different, even if they appear to have the same behavior in the same markets. Building bridges here requires special attention and commitment from management.

KH: What do M&A processes mean for employees?

UR: At the employee level, the emotional reactions that a takeover can trigger, especially in the acquired company, must be taken into account. After all, it is not uncommon for emotions to run high in the acquired company. This is hardly surprising, given the threat of job loss, changed management structures or at least a changed area of responsibility with new requirements as a result of necessary restructuring measures. Employees often perceive all of this as excessive demands. Skepticism and mistrust, in the worst case even fear, are the predominant emotions in the rumor phase. This is where effective and well thought-out change management comes in.

KH: So open and transparent communication between all levels is an important prerequisite for M&A success. How can employees play an active role in shaping the merger?

UR: Open and transparent communication in all phases of the integration process is a key success factor for the success of the acquisition. The communication strategy must focus on the fears and concerns of the employees and look to the future with a view to the shared values and goals of the new company. The aim is to transform negative emotions into openness and curiosity for the future so that employees have a positive attitude towards the change. Ideally, at the end of the transformation process, the two companies will be fully integrated, with employees actively involved in shaping the process. A shared vision, a "big picture", can make it possible to turn two companies into a single entity. This must also be done in the economic interest of the company.

"If you don't take corporate culture into account, you risk the merger failing"

KH: When can corporate culture become a problem in M&A processes?

UR: The corporate culture itself is not the problem, but failing to take it into account in the integration process can lead to the failure of the entire transformation process, the acquisition. The role of management personnel in the M&A process can therefore hardly be underestimated, and this applies to all phases of a company takeover. Good cooperation between managers in both parts of the company is particularly important when designing the integration program and communication. Good cooperation is a key success factor.

KH: To what extent can the ETC help to ensure that such difficulties do not arise in the first place or are nipped in the bud?

UR: The Enterprise Transformation Cycle (ETC) is a model that focuses on the dimension of hard figures as well as cultural and human-emotional factors. It offers a holistic view of the transformation process that is also suitable for the management of mergers and, in particular, post-merger integration.

KH: Is there such a thing as universal conditions for success in M&A processes?

UR: Every project has its own particular starting situation and different objectives, which is why we cannot speak of universally valid conditions for the success of M&A processes. However, the following success factors are repeatedly mentioned in terms of minimizing risks when acquiring companies, e.g. by Rolf Epstein:

1. A coherent integration strategy
2. A strong integration team
3. Communication in all phases and at all levels
4. Speed of integration
5. Suitable implementation measures and metrics to accompany the integration strategy in a coherent manner

KH: Dear Mr. Rörig, thank you very much for this interesting interview

"The Enterprise Transformation Cycle" - published January 2019

The Transformation Consulting International has been supporting national and international transformation projects in companies for many years. This extensive practical experience has now resulted in the volume "The Enterprise Transformation Cycle"published by the renowned Springer-Verlag, edited by Mario A. Pfannstiel and Peter F.-J. Steinhoff. In the 400-page anthology, numerous authors describe the extensive applicability of the agile and flexible "Enterprise Transformation Cycle" approach in theoretical and conceptual articles as well as in practical case studies.

Source cover picture: © alphaspirit | Fotolia