Chanelle Gibson

ThoughtLogic Article Among the constantly evolving and innovating business culture of the United States, one major trending topic is mergers and acquisitions. Various factors are creating this boom, some including tax reforms, the regulatory climate, and increasing cash reserves. All these influences increase optimism among dealmakers, and that will continue to fuel the M&A trend. In a recent research survey, 79% of dealmakers expect to increase the number of deals they close in the next 12 months, compared to only 70% last year. The refreshing perspective of new talent and the positive changes that come with M&A’s make them imperative for success. Leading experts estimate that technology acquisition, growing customer bases, and expanding products/services will continue driving the acceleration of M&A activity. As mergers and acquisitions increase, many of them will struggle throughout the transition and some will inevitably fail. So, how can organizations set themselves up to give them the highest chance of success going through these deals? The biggest areas of struggle are often cultural misalignment, poor communication, fear of being “absorbed,” and fear of territorial/scope loss. These issues must be tackled proactively, with clear plans and structures. Mergers and acquisitions require organizational effectiveness to achieve their objectives and full potential. Organizational effectiveness will best integrate new people and manage the change/culture component of successful M&A outcomes. Leading experts have determined the top reasons why M&A transactions don’t reach the outcomes they’re expected to. Among corporate and private entities, 1/3 of them determined that execution and integration gaps were a major internal factor that led to failure. Organizational effectiveness involves effectively managing organizational and people risk through the integration. This has been shown to provide about 60% more positive outcomes and successful deals. We offer the following recommendations on how to best enforce organizational effectiveness during your M&A to create the best possible outcome: Operationalize your process and enable your workforce to develop, this will weigh heavily on your return on investment if done well. Clearly define all new systems and processes, then give your employees time to learn and adjust to them. All decisions made before, during, and after the transition must be systemic and specific, keeping the employees in mind as important moving pieces throughout the process. Prioritize cultural integration, focusing on bringing everyone together in the same vision. None of the parts coming together should feel as though they are being “erased” or “overtaken.” Combining all parts into a new, stronger culture will foster a more team-oriented and open-minded attitude when it comes to change. Create a clear organizational structure that makes sense. Positions may shift, teams may be repurposed, and leadership responsibilities may change. Among these adjustments, maintain structure and coordinate exactly when and how they will occur. Preserve effective leadership and communication. This transition process will heavily rely on leaders to set good examples. Effective leaders will adjust to the M&A quickly and help others to do the same. Effective communication will avoid confusion and misunderstandings across the organization. These recommendations will help M&A’s have the highest chance of success. However, there is still much to keep in mind through these transitionary periods. As things are progressing, maintain a holistic view of the operating model. Use the organization’s mission to inform a new operating model that new functions can be designed around. Foster engagement and commitment to the positive outcomes the future holds. Invite stakeholders and executive and mid-level leaders to be engaged in the whole process. Allow them to provide feedback, voice their concerns, and participate in open dialogue. Keep in mind ways to maintain talent and plan for how to attract more talent after the transition is complete. Decidedly shape the new culture of the organization. Accelerate the establishment of new teams, readjusting sizes, leadership, and purposes. Forge transparent and authentic interactions among team members and from leadership to build strong relationships. Organizational effectiveness will pull all these concepts and notions together, helping your M&A run its course smoothly. Mergers and acquisitions will continue growing as a trend, but they don’t have to be an uphill battle. Set your organization up for success so that these deals can reach all desired outcomes plus more.