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  • Writer's pictureiKadre

You Merged a Business – Now What?

Updated: Oct 17, 2023

Mergers are significant events in the business world, often driven by a mix of motivations such as strategic growth, market expansion, cost synergies. Completing the merger transaction, however, is like seeing a false summit on a mountain hike: It may look like you’ve completed your journey, but there’s still more work ahead. For businesses, integrating the resources, processes, and employees from both companies takes careful planning, execution, communication, and empathy.

What is a Merger?

While some people use the terms “merger” and “acquisition” interchangeably, they aren’t exactly the same. In a merger, the buying company intends to create a new business by combining with the target it’s buying. In an acquisition, the buying company plans to absorb the target business. Successfully completing either is similar, as are the potential pain points.

The Motivation Behind the Merger

Understanding the motivation behind the merger is essential in setting the right direction for the newly merged entity. Was it driven by the desire to expand market presence and access new customer segments? Or was it to combine complementary products and services for increased competitive advantage? Whatever the reasons, a clear understanding of the merger’s objectives helps in formulating a focused strategy moving forward. In some cases, companies are looking to “acquihire,” or buy a business for its employee talents and skills.

The Functioning of the Merged Entity

Once the merger is complete, the organizational structure undergoes changes. This may involve a realignment of management roles, reporting lines, and departmental structures to ensure optimal efficiency and collaboration. Integrating the best practices from both businesses and creating a unified culture will also be critical for the merged entity’s success. That said, axing employees to reduce costs without understanding their roles can lead to disaster. Many mergers falter or even fail when the buying company treats the employees they’re acquiring as little more than cells in a spreadsheet, according to Forbes.

Immediate Post-Merger Priorities

Post-merger integration requires swift action to address critical priorities. Aligning systems and processes, consolidating resources, and establishing a robust communication plan are key areas that need attention. A detailed plan with measurable milestones can help keep the integration on track.

Impact on Employees

Mergers often create uncertainty among employees. It is essential for the management to communicate transparently about how the merger will impact their roles and the overall workforce. This may involve job reassignments, potential layoffs in redundant positions, and the creation of new opportunities within the merged organization. Implementing effective change management strategies can help employees navigate through this period of transition. Be prepared for employee stress, too, because they’ll likely be concerned about potential layoffs, responsibility changes, and adapting to unfamiliar procedures. Open and clear communication is critical for team morale and confidence during the transition.

Impact on Customers and Clients

Existing customers and clients need reassurance during this transitional phase. Any potential changes in products or services, customer support processes, or pricing structures should be communicated clearly to maintain trust and loyalty. Putting customers at the forefront and addressing their concerns promptly can help retain valuable relationships. Again, clear communication is key. Customers and clients who feel uncertain about the post-merger business are more likely to move to your competitors.

Impact on Stakeholders

Mergers can have varying impacts on stakeholders, including shareholders, investors, suppliers, and business partners. Shareholders aren’t always confident in ownership structure and management changes, while suppliers and partners might need to adjust to new contractual agreements. Business partners might have concerns over service or production disruption. Communicating with stakeholders and understanding their concerns will be crucial in building lasting partnerships.

Overcoming Integration Challenges

Challenges are inevitable during the integration process. Cultural differences, technology integration, and conflicting processes can hinder progress. Empathy goes a long way towards overcoming these issues. Make sure managers, team leaders, and those seen as authority figures by other employees understand the goals and are part of the integration process. In many cases, these are the people with critical knowledge about how-and-why systems and procedures work. They can also be key players in drumming up support for the transition from other employees. Harvard Business Review says between 70% and 90% of mergers and acquisitions fail in part because key employees leave or are laid off, and because teams from both companies aren’t motivated to cooperate.

Driving Growth and Creating Value

One of the indicators of a successful merger lies in capitalizing on growth opportunities and synergies. The combined strengths of the merged businesses can better compete in the marketplace, enabling the entity to expand its market share and drive innovation.

Long-Term Goals and Vision

A clear vision for the merged entity’s future is essential for sustained growth and success. Setting long-term goals, such as market dominance or diversification, will guide decision-making and resource allocation. Emphasize the unique advantages that the merger brings and how they will be leveraged to achieve the vision.

The Future for Employees and Stakeholders

Employees and stakeholders need assurance that the future holds promising prospects. Emphasize the importance of adaptability and continuous communication to keep them engaged and informed. As the merged entity takes shape, new opportunities may arise, and it is vital for everyone involved to stay open to change.

Navigating the Merger Landscape

Merging two businesses is a complex undertaking that requires careful consideration and execution. By addressing the immediate priorities, overcoming integration challenges, and leveraging the synergies for growth, the newly merged company can position itself for long-term success. Effective communication and inclusiveness will be key to maintaining the trust and support of employees, customers, and stakeholders throughout the transition and beyond. While the process is complicated and requires a lot of planning and research, you don’t have to do it alone. Schedule an appointment with us to discuss your business merger needs and strategy.

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