By David Braun, founder & CEO of Capstone Strategic
The M&A deal is done. Applause, champagne, and optimism fill the boardrooms of both buyer and seller. The due diligence has become done diligence and now the only thing left is integrating both workforces to become one. Let’s face it. If the brass got on board, how hard could merging the troops be? Get ready, because in most cases, this part of the deal can be a very bumpy ride.
The biggest challenge is knowing how best to bring the two groups together to generate mutual respect and move forward in the same direction. Whether it is two divisions of engineers, accountants or creative teams, sharing the same professional skillsets doesn’t automatically mean there will be synergy and too often a poorly planned integration is the reason why many acquisitions fail.
That is why M&A deals shouldn’t be viewed as “a beginning to an ending” but rather “a beginning to a beginning.” Combining two existing workforces to create one new workforce will take thought, care and patience to wind up with a strong, focused, and fully aligned team.
Here are four of the most common integration issues and tips on how to effectively address them.
- Dealing with Finance and HR. Getting paid is priority number one for nearly all employees. What to do about your payroll should mirror established schedules and processes otherwise there is a potential for great confusion and concern. If you have decided to consolidate accounting/payroll departments, make sure this is communicated in advance so everyone knows what to expect. The HR team may also face a huge new volume of work as insurance benefits, retirement plans, sick/PTO days, and work schedule (hybrid vs. remote) must all be considered.
Tip: Having a written integration plan in place is essential. Being able to execute it on day one is vital. You should organize your plan by functional area (operations, finance, IT, sales, suppliers, etc.) so even seemingly simple details are not overlooked.
- Bridging multi-generational workers. Having only known a world with the internet and mobile devices, younger workers have embraced virtual working and often are reluctant to appreciate the value older workers place on in-person meetings, attending networking events, even making client telephone calls.
Tip: In the first 100 days, new owners should reach out to both the most junior and most senior employees of the acquired company to get their ideas, opinions, and suggestions. It is also important to hold team-building exercises to build mutual respect and trust in which the duo-generations are partnered up for innovative and solution-focused tasks.
- Managing time zone conflicts. If you have acquired a company that has all employees, customers, and supply chain on the east coast and you are based in California or further away like Asia, depending on the duties and responsibilities of various departments, adjustments will likely need to be made by the newly acquired workforce.
Tip: Don’t impose new hours on anyone; instead find out by asking who would like to make an adjustment (temporarily or permanently). Announce what hours need to be covered and if there is reluctance by qualified staff, then be prepared to sweeten the deal with extra benefits. Remember, your goal is to have a successful workforce integration and approach and communication are critical for this to be satisfactorily achieved.
- Shared Sensibilities & Expectations. An incredibly important, but too often overlooked aspect of integration, is that of culture. You are not simply merging two companies, you are merging two distinct groups of people. Culture can encompass any number of items from what constitutes appropriate dress to regular office hours to style of language, and more.
Tip: This process should begin with the acquiring company fully examining its own culture and then comparing aspects with the newly acquired business. Using a Cultural Assessment Survey can be very helpful providing a blueprint for where differences could be an issue and must be addressed or an asset that should be utilized. Compromise and understanding should always be present as long as established standards are recognized and followed.
Ultimately, your best chance at workforce integration success is to have a vision and an executable plan for both teams to merge and operate in sync. For an optimal outcome, it is always recommended to try and adopt a shared methods structure in which the best practices of each of the two companies can become the agreed upon way to do things. Set aside ego, listen to both workforces, and be open to new ideas. This will greatly increase your chances for a successful M&A transition of integrating two into one. Good luck!
David Braun is founder & CEO of Capstone Strategic, a leading M&A strategic consulting firm that has successfully facilitated over $1 Billion of client transactions in over 30 countries across more than 100 industries. He is the author of Successful Acquisitions: A Proven Plan for Strategic Growth and can be reached on LinkedIn.