When two companies come together in a merger or acquisition, they often don't come together. Instead, they fall into a siege mentality of in-group vs. out-group. For that reason, they also often don't succeed in the new venture.
In Ivey Business Journal, Suzanne Francis and Jonathan Stearn of Schaffer Consulting argue that the chances of success would be enhanced if the two companies tried to increase their "collaboration quotient" – the creative use of joint acquirer-acquiree efforts at all stages of the deal. Here are three areas they highlight:
Expanded due diligence
While the deal is still in its early stages, leaders should establish an internal, cross-functional team for due diligence and charge its members with creating an integration report. This collaborative effort will help to focus the planning on areas with the best potential to deliver the expected benefits of the combination, and to speed up the integration planning once the merger or acquisition has closed. The consultants say it's a matter of judgment and preference whether this effort comes before or after the deal closes.
The merger intent
For many deals, the consultants note that there is only a vague notion about what will happen to achieve better results as a combined force. In companies where there is an open mind about collaboration, however, the crucial period between when the initial agreement is signed and when the deal is closed is key. It can be used to begin a joint effort to figure out the merger intent – a vision of what the new organization will look like from strategic, operational, financial and organizational perspectives a year to 18 months after the close.
The consultants say the experience of jointly developing the merger intent is just as important as the document that is eventually created: "It gives senior executives of both organizations the chance to engage and interact around topics critical to the success of the combined organization. They recognize the groundwork in terms of objectives and priorities they are laying for the work of numerous integration teams, and how important their vision and leadership will be to delivering on the promise of the deal. Finally, it provides the framework for building clear accountability into the integration initiative."
Integration
Whether you have managed to collaborate earlier or not, once the companies merge, collaboration from then on will pay off. But it's a tall order, as you must engage many people – perhaps hundreds – to deliver improved performance. The consultants recommend identifying the most important, high-payoff integration opportunities and launching a collaborative effort to accomplish results in 100-day cycles.
"Where this has been done, the benefits are significant: accelerated integration, earlier achievement of synergies and the development of leaders and managers who can play an on-going role in the success of the combined company," they report.