Making acquisitions really count
Several rounds of due diligence, multiple variations on excel, alternative operating models, countless rounds of negotiation and a lot of gut-feel goes into making an acquisition. Many times, attempts to ink a deal progresses a fair bit but are then called off.
Acquisitions aim to boost growth by multiples (reach, portfolio, customer base, profitability) and reduce the timespan set for the goals. Unfortunately reaping benefits from this inorganic strategy requires focus on multiple variables, each one needing substantial investment of time and resources. One amongst these and probably the most commonly encountered variable is People. The ‘People Variable’ manifests itself in multiple forms—exit of key personnel, loss of focus, internal matters taking precedence over market/customer, lack of motivation in the times immediately following the acquisition, rumors and a general air of vulnerability about ones role and importance.
Its common knowledge that most attempts to integrate are largely focused on aligning the leadership team. This is done with the help of steps like creating unified operating model, single organization structure, integrated teams, matrix reporting, and constituting committees to oversee yet to be integrated parts. However, a bulk of the population remains un-prepared. In such situations, people look for reassurance from their managers or the mid-management. Mid-management has the maximum reach in an organization, and in times like these, its impact is also greatly pronounced. Hence Reach * Impact of this population is greatest in such situations. Building their comfort with the new strategy, operating model and plan is imperative and hence a mid-management buy-in is key.
Many a times, old leaders of the organization being acquired are replaced. This creates a ‘trust void.’ Assuming that new people can bridge this in a short span is hazardous at worst and with diminished probabilities of success at best. It spreads a negative sentiment not only at the peer level but also across the organization. Familiarity is critical. People need time with people.
Even simple changes in most steady times like adopting new softwares, adhering to a newly laid out control evoke a lot of concerns and complaints from the user base. Each organization is comfortable with a certain speed of change based on its own evolution. When these changes are brought about as a result of acquisition, the reactions are seldom measured. Internal capacity of coping with multiple changes is almost always higher than their comfort threshold. The pace of change is almost as critical as the timing of the change.
One needs to consider the following measures to reap benefits from this inorganic strategy.
• Plan for a longer horizon to manage the integration.
• Sequence the changes and ease the pace to enable its acceptance.
• Focus on building comfort amongst the middle management. Seek their views on the proposed changes; planned integration of teams, new controls, systems and reporting requirements.
• Empower select members of the middle management sourced from different functions to drive some of the changes.
• Allow the old leaders to function alongside for a reasonable period so as to ensure time for the new to settle in. Meet all stakeholders, teams, suppliers, customers in their presence.
• Influence informal channels of communication through a select team. Educating them to manage questions posed will help spread a sense of positivity.
• Ensure consistency of messages being received from different parts of the organization.
The idea is to be cognizant that people across the organization do not see the changes in the same way. Efforts to integrate hence need to be centered somewhere deep in the organizational pyramid. Above all, the success of the initiative will depend heavily upon the expectations set with all the stakeholders. The right promises backed by the right effort will yield the desired results.