Managing Risk in Mergers & Acquisitions - A Review of the Literature

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Contents

About The Author & This Article

Rachel Curry, Research Consultant, Bishop Phillips Consulting

This article presents a summary of the literature examining the risks in corporate mergers and acquisitions over a 20 year period up until 2003. It was originally prepared by Rachel Curry of our research team as background detail for a briefing provided to the Members or the Bendigo Stock Exchange by Jonathan Bishop. The subheadings represent the names of the articles or papers summarised. Document links were added after the initial paper was prepared, and some references may be in error. The original summaries were compiled from printed editions of the papers or texts, and some page references may differ from the online references. Most of the links will navigate to subscription or book distributers as appropriate. Please advise any identified discrepancies.


MERGER FAILURE RATES AND REASONS FOR FAILURE

Managing Mergers, Acquisitions & Strategic Alliances

[1] Sue Cartwright, Cary L. Cooper

Diagnosis and analysis of merger failure has traditionally focused on financial and strategic factors, with mergers considered to fail for rational economic reasons such as economies of scale not achieved to the magnitude expected, poor strategic fit or unexpected changes in market conditions. However, considering financial and strategic factors only is insufficient to achieve a successful merger or acquisition. Two important human factors to merger and acquisition success which impact on integration are:

  • ‘The culture compatibility of the combining organizations, and the resultant cultural dynamics.’
  • ‘The way in which the merger/acquisition integration process is managed.’

A lack of cultural compatibility can inhibit the creation of a ‘cohesive and coherent organizational entity’. A survey conducted by the British Institute of Management (1986) determined that ‘managerial underestimation of the difficulties of merging two cultures was a major contributory factor to merger and acquisition failure.’

The factors often held responsible for merger and joint venture failure include the selection of inappropriate venture partners, cultural incompatibility, and general “parenting” problems. (p.18)

There has been much debate about the most appropriate and accurate way to assess the gains arising from mergers, including both managerial and mathematical methods. Despite the method selected, many studies indicate mergers have an unfavourable impact on profitability, with research conducted by Mecks (1977) and Sinetar (1981) concluding that mergers have been associated with lowered productivity, worse strike records, higher absenteeism, and poorer accident rates.

Further research conducted by Ellis and Pekar (1978) and Marks (1988) suggest that in the long term between 50 and 80 per cent of all mergers and takeovers are considered financially unsuccessful, while a study conducted by the Department of Trade and Industry, published by the British Institute of Management (1988) and another by Hunt (1988) determined the success rates post-acquisition to be around 50 per cent. More current studies show similar trends continuing, with Cartwright and Cooper (1996) determining, on the basis of financial results in the first year of combined trading, that only half of mergers and acquisitions studied were successful.

Estimate by Davy et al (1988) held ‘employee problems’ to be responsible for between one-third and half of all merger failures, while a discussion paper by the British Institute of Management (1986) identified sixteen factors related to unsuccessful mergers and acquisitions, including (p.28):

  • underestimating the difficulties of merging two cultures
  • underestimating the problems of skill transfer
  • demotivation of employees of acquired company
  • departure of key people in acquired company
  • too much energy devoted to ‘doing the deal’, not enough to post-acquisition planning and integration
  • decision making delayed by unclear responsibilities and post-acquisition conflicts
  • neglecting existing business due to the amount of attention going into the acquired company
  • insufficient research about the acquired company

‘Ability to integrate the new company’ (p.28) was ranked as the most important factor for acquisition success according to a study by Booz, Allen and Hamilton (1985) while Kitching (1967) determined ‘the key to merger success was essentially the way in which the “transitional process” was managed and the quality of the working relationship between the partnering organizations.’

Consulting in Mergers and Acquisitions

[2] Marks M.L.

Three studies (Davidson, 1991; Elsass and Veiga, 1994; Lubatkin, 1983) have found that ‘fewer than 20 per cent of corporate combinations achieve their desired financial or strategic objectives.’ Zweig (1995) studied deals value at $500 million or more, and found that half of these deals destroyed shareholder value, 30 per cent had a minimal impact and only 17 per cent created shareholder value. Many factors attributable to this low success rate, including (p.1):


  • paying the wrong price
  • buying for the wrong reasons
  • selecting the wrong partner
  • buying at the wrong time
  • managing the post-merger integration process inappropriately

Marks (1997) together with previous studies (Marks and Mirvis, 1997; Mirvis and Marks, 1992) found the common factor restricting ability to achieve hoped-for synergies and financial gains to be (p. 1- 2):

  • ‘underestimating the multitude of integration issues and problems that arise as organizations come together;
  • underestimating the drain on resources and the distraction from performance required to manage the transition from pre- to post-merger status; and
  • underestimating the pervasiveness and depth of the human issues triggered in a merger or acquisition.’

Since mid-1980s, many aspects of mergers and acquisitions have changed, including (p.3):

  • ‘deals are more strategically driven
  • technological advances are driving deals
  • globalization is driving more deals
  • deals are involving larger organizations
  • entire industries are put into play (deregulation, social policies and changing customer demands)
  • managers are smarter about doing deals and managing integration
  • human assets are even more crucial to merger and acquisition success than before.’

“Consultations to facilitate mergers and acquisitions emanate from sound change management principles, yet must be sensitive to the special requirements of combining complex organizations.” (p.4)


Enhancing the Success of Mergers and Acquisitions

[3] Mike Schraeder, Dennis R. Self

Research conducted by Carleton (1997) indicate between 55 – 70 per cent of mergers and acquisitions fail to meet their anticipated purpose. Number of researchers determine that cultural incompatibility of the companies involved in the merger/acquisition are partly responsible for financial benefits anticipated not being achieved (Fralicx and Bolster, 1997; Cartwright and Cooper, 1993). Chatterje et al (1992) also agree that poor cultural fit has contributed to several merger and acquisition failures where the companies involved appeared to be suitable strategic partners. Mirvis (1985) highlighted four factors that were believed to impact on the integration of organizations:

  • top management relations (including reporting relationships, decision making and flexibility)
  • compatibility of business systems
  • existence of a culture that will support the integration of business systems
  • goals the respective parties intend to achieve


Several other factors impacting on integration that have been identified through other research are:

  • compatibility of respective business systems (Mirvis, 1985)
  • organizational members experience difficulty adjusting to new procedures and performance standards (Marks and Mirvis, 1992)
  • differences in managerial styles and accounting practices (Cartwright and Cooper, 1993)


Weber (1996) identifies that anticipated benefits from mergers and acquisitions are other unrealized because of productivity losses and the ‘traumatic effect of mergers and acquisitions on a firm’s human resources.’ Also finds that ‘the magnitude of cultural differences can effectively impede a successful integration during mergers and acquisitions, resulting in poor financial performance.’ Coopers and Lybrand (1992) studied failed mergers and acquisitions, and over 80 per cent of the executives involved identified that different management practices and styles as the primary contributor to integration issues. To achieve merger and acquisition success, several researchers have determined the following factors need to be considered:

  • develop a flexible and comprehensive integration plan
  • share information and encourage communication
  • encourage participation by involving others in the process
  • enhance commitment by establishing relationships and building trust

Due Diligence: The Devil in the Details

[4] Greengard, Samuel

“HR has a critical role in due diligence – both from the benefits and compensation side and the cultural side” – Deborah Rochelle, senior merger and acquisition consultant, Watson Wyatt Worldwide. She believes that ‘due diligence must encompass people, programs, plans, policies and processes.’ Clemente (1999) states that ‘ultimately, many mergers fail because of human resource–related issues, such as culture clash.’ Studies have found that between 50 and 75 per cent of all merging companies fail to retain book value two years after merging, and ‘many others are torpedoed by ongoing culture clash and an erosion of top talent.’ (p. 2) Mitchell Lee Marks, management consultant, believes a number of failed mergers aren’t because of inept management or inadequate due diligence, but because the two organizations haven’t determined whether they have compatible cultures or how to overcome these differences if the cultures aren’t compatible. Organizations should develop a detailed checklist to work through due diligence process to allow the organization to evaluate which factors are most important.

On Managing Cultural Integration and Cultural Change Process in M & A

Bijilsma-Frankema, K. (2001) Journal of European Industrial Training, Vol.25

Magnet (1984) and Gilkey, 1991) have found that between 60 per cent and two-thirds of mergers and acquisitions fail to meet expectations. Gilkey argues that:

‘the high percentage of failure is mainly due to the fact that mergers and acquisitions are still designed with business and financial fit as primary conditions, leaving psychological and cultural issues as secondary concerns. A close examination of these issues could have brought about a learning process, directed at successfully managing such ventures.’ (Gilkey, 1991, p.331) Eisele (1996) found three factors that generally influence the success of mergers and acquisitions (p.6):

  • cultural fit
  • cultural potential
  • competent managers to guide the process

The Effective Management of Mergers

[5] Han Nguyen, Brian H. Kleiner

YTD 2002, there were over 4,363 mergers and acquisitions, worth over $291.7 billion.

Prime reason for most mergers and acquisitions is to maintain or increase market share, and to increase shareholder value by cutting costs, and introducing new, expanded and improved services.

Study by KPMG (publishing in PR Newswire, 1999) found that between 75 and 83 per cent of mergers and acquisitions failed, where failure meant lowered productivity, labour unrest, higher absenteeism and loss of shareholder value, or even a dissolution of the companies involved.

Merger success is directly correlated with the level and quality of planning, with insufficient time often being spent analyzing current and future market trends and integration issues. Failure is often also due to an insufficient due diligence (Oon, 1998).

Simpson (2000) found the opportunity for mergers to fail is greatest during the integration phase because of improper managing and strategy, culture differences, delays in communications, and lack of clear vision. Bijilsma-Frankema (2001) found ‘increasing evidence that cultural incompatibility is single largest cause of lack of projected performance, departure of key executives, and time-consuming conflicts in the consolidation of businesses.’ KPMG developed best practice guidelines, with the following main keys necessary for successful integration (p.4):

  • ‘Directors must get out of the boardroom
  • Set direction for the new business
  • Understand the emotional political and rational issues
  • Maximize involvement
  • Focus on communication
  • Provide clarity around roles and decision lines
  • Continue to focus on customers
  • Be flexible’

Communication is listed as the key factor to make integration effective and successful.

Managing Merger Madness

[6] Journal: Strategic Direction (Author unkown)

Successful mergers and acquisitions consist of (p.1):

  • Acquisition target being carefully and dispassionately selected
  • A post-acquisition strategy relevant to the newly merger organization need to be developed from the start

In pre-merger planning stage, the most common mistakes are (p.1):

  • Failure to conduct a detailed risk assessment and management profile of the acquisition target
  • Allowing pressure to increase share value to take the place of a convincing strategy
  • Assuming total synergy

The most common mistakes in integration processes are (p.1):

  • Slow post-merger integration
  • Cultural conflicts
  • No risk management strategy


Merging for Success

[7] Author: Unknown

Found that in the first few months following the announcement of an acquisition, productivity falls by up to 50 per cent. Most mergers and acquisitions fail for reasons other than money, such as leadership issues involving unclear objectives or cultural clashes.

Anatomy of a Merger

Unknown.

Success of mergers and acquisitions range from 20 to 60 per cent (British Institute of Management, 1986; Hunt, 1988; Marks, 1988; Weber, 1996). Poor results have now generally come to be attributed to poor human resource planning. Research identifies communication to be the most important factor during the merger and acquisition process. Both Balmer and Dinnie (1999) and De Voge and Spreier (1999) indicate that communication is the key to a successful integration of two clashing cultures.

Ernst and Young (1994) identified cultural incompatibility as the single largest cause of ‘lack of projected performance, departure of key executives, and time-consuming conflicts in the consolidation of businesses.’ (p. 3) For sustained competitive advantage to be achieved, it is imperative the mergers and acquisitions be implemented from a financially and legally sound standpoint, as well as a behavioural approach. Leadership from top-level management is also important for merger success. Weber (1996) found the higher the commitment of the acquired firm’s top management, the higher the effectiveness and the financial performance of the merged entity. Success mergers are led by CEOs who (p.6, Part II):

  • Dedicate executive time and focus
  • Put together a leadership team
  • Focus management attention on success factors
  • Create a sense of human purpose and direction
  • Model desired behaviour and ‘rules of the road’

It is recommended a merger-tracking program be implemented to determine whether the organization is working towards its goals, and what the merger outcomes were. It should cover things such as (p.7 – 8, Part II):

  • ‘Is the combination achieving financial and operational goals?
  • Are schedules on target, and are changes being implemented effectively?
  • Do employees understand and support the need for change?
  • What is the effect on people’s well-being and esprit de corps?
  • Are managers at all levels taking steps to minimize negative reactions and build positive feelings?
  • Are productivity or work quality being affected?
  • Do people understand their new roles and what is expected of them?

ATTRIBUTES LEADING TO SUCCESS OR FAILURE

Mergers and Acquisitions: A Guide to Creating Value for Stakeholders

[8] Michael A. Hitt, Jeffrey S. Harrison, R. Duane Ireland

Some important factors that can contribute to success or failure in mergers and acquisitions are:

Due Diligence Lack of due diligence has caused many merger failures. Involves comprehensive analysis of firm characteristics such as financial condition, management capabilities, physical assets and intangible assets.

Financing Manageable debt levels should be ensured.

Complementary Resources Occurs when the ‘primary resources of the acquiring and target firms are somewhat different, yet simultaneously supportive of one another.’ (p.179) This tends to create economic value to a greater value that exists when the merging firms have identical or unrelated resources.

Friendly/Hostile Acquisitions Friendly acquisitions tend to create greater economic value. A hostile acquisition can reduce the transfer of information during due diligence and merger integration, and increase turnover of key executives in the firm being acquired.

Synergy Creation Four foundations to creation of synergy are strategic fit, organizational fit, managerial actions and value creation.

Organizational Learning Many people should participate in the acquisition process to ensure knowledge about acquisitions is being spread throughout the firm, and isn’t lost if one of the key people typically involved leaves. The learning process should be managed, with steps taken to study and learn from acquisitions, with the information gained recorded.

Focus on Core Business Cultural and management differences are more greatly magnified the less firms have in common, therefore constraining the sharing of resources and capabilities. ‘Result is that positive benefits from financial synergy are not enough to offset the negative effects of diversification.’ (p.181)

Emphasis on Innovation

Innovation is critical to organizational competitiveness. ‘Companies that innovate enjoy the first-mover advantages of acquiring a deep knowledge of new markets and developing strong relationships with key stakeholders in those markets’ (p. 181)

Ethical Concerns / Opportunism

Risk in mergers and acquisitions is that the information received may be incorrect, misleading or deceptive. Steps should be taken to ensure that the information is accurate and hasn’t been manipulated by management with the aim to making performance appear higher than it is.

The Complete Guide to Mergers & Acquisitions: Process Tools to Support M&A: Integration at every level

[9] Timothy J. Galpin, Mark Herndon

The likelihood of a successful merger is increased by considering the following ten key recommendations (p. 196 – 197):

  • ‘Conduct due-diligence analyses in the financial and human-capital-related areas.
  • Determine the required or desired degree of integration.
  • Speed up decisions instead of focusing on precision.
  • Get support and commitment from senior managers.
  • Clearly define an approach to integration.
  • Select a highly respected and capable integration leader.
  • Select dedicated, capable people for the integration core team and task forces.
  • Use best practices.
  • Set measurable goals and objectives.
  • Provide continuous communication and feedback.’


Due Diligence Human resource due diligence analysis as well as financial due diligence is important. It provides details about where the companies converge or diverge in areas such as leadership, communication, training and performance management. Identifying this can allow the companies to plan for any conflicts that might occur during the integration phase in respect to these matters.

Speedy Decisions Tends to allow faster integration, and enables people to refocus more quickly on work, customers and results.

Clearly Defined Approach Allows faster decision making and organizes the entire integration process. ‘Without a defined approach that includes clear deliverables, due dates, milestones, information flows, and so on, each function of the enterprise will be working on a different schedule and producing deliverables that vary widely in terms of quality and content.’ (p.198)

Capable Leadership ‘The integration leader should be an excellent project manager with a broad view of the enterprise and good people skills.’ (p. 198)


Measurable Goals and Objectives Measurable goals and objectives let people involved know what a successful integration consists of, and how long it should take.

COMMON PROBLEMS AND CHALLENGES IN ACQUISITIONS

Managing Acquisitions: Creating Value Through Corporate Renewal

[10] David B. Jemison, Philippe C. Haspeslagh


Four common challenges in managing acquisitions are (p. 8):

  • ‘Ensuring that acquisitions support the firm’s overall corporate renewal strategy
  • Developing a pre-acquisition decision-making process that will allow consideration of the “right” acquisitions and that will develop for any particular acquisition a meaningful justification, given limited information and the need for speed and secrecy.
  • Managing the post-acquisition integration process to create the value hoped for when the acquisition was conceived.
  • Fostering both acquisition-specific and broader organizational learning from the exposure to the acquisition.’

‘The key to integration is to obtain the participation of the people involved without compromising the strategic task.’ (p.11)

Acquisition integration has several challenges (p.11):

  • ‘Adapting pre-acquisition views to embrace reality,
  • An ability to create the atmosphere necessary for capability transfer,
  • The leadership to provide a common vision,
  • And careful management of the interactions between the organizations.’

Process Perspective

‘Adopting a process perspective shifts the focus from an acquisition’s results to the drivers that cause these results: the transfer of capabilities that will lead to competitive advantage. In the process perspective, acquisitions are not independent, one-off deals. Instead, they are a means to the end of corporate renewal. The transaction itself does not bring the expected benefits; instead, actions and activities of the managers after the agreement determine the results.’ (p.12)

(A summary of the entire chapter is provided on p. 15)

Winning at Mergers and Acquisitions: The Guide to Market-Focused |Planning and Integration

[11] Mark N. Clemente, David S. Greenspan


Key to successful mergers and acquisitions is ‘being able to take the differences inherent in the two companies and meld them to create an enhanced capability.’ (p. 43)

Problem is often that stakeholders focus on the short-term benefits from mergers and acquisitions such as cost reduction, which results in decisions being made that can sacrifice long-term goals to achieve short-term savings. ‘When companies seek to merge or acquire, and can cite more than two strategic drivers as reasons to come together, then the chances of success are higher.’ (p.44)

Twelve common challenges present in the majority of mergers and acquisitions are (p.163):

  • ‘Embracing the concept of change
  • Setting priorities
  • Sharing information and effecting corporate understanding
  • Melding cultures
  • Forging a new corporate identity
  • Determining managerial roles and responsibilities
  • Effecting teamwork and cooperation
  • Combining corporate functions and internal processes
  • Aligning capabilities, services, and products
  • Measuring results
  • Acknowledging the two levels of integration
  • Maintaining flexibility’

The long-term success or failure of mergers and acquisitions can be determined by the steps put in place to meet these challenges – each challenge should be ‘met with a clear focus and forward-thinking tactics.’ (p.163)

Setting Priorities Integration planning is the number-one priority once a deal has been closed. The critical steps in the integration process itself are:

  • Address corporate information, marketing, and sales departments quickly, as these represent the company to stakeholders
  • Corporate image and branding aspects are important to begin promoting the new image. This allows the company to display ‘the best face on the merger to external audiences while you grapple with many of the longer-term internal and operational issues.’ (p.165)
  • Focus on retaining key employees
  • Focus on customer retention – this is critical to maintain the value of the acquired company.


Sharing Information and Effecting Corporate Understanding The two companies need to share information, and understand the nature of the new corporate relationship. This should address issues such as ‘What is the company’s corporate philosophy? What are the strategic intentions of senior management? Why has the company come to develop, commercialize, and invest in the products and services it does? How are the sales and production people compensated and why?’ (p. 166)

Melding Cultures

‘Cultural compatibility is one of the most significant determinants of a successful M&A transaction.’ (p.167) ‘Acknowledging whether cultural compatibility can exist should be a factor in determining whether to pursue a given deal. Integration can never be attaining – and growth strategies never realized – if two companies are worlds apart culturally.’ (p.167) This alignment of cultures can be achieved through information sharing, emphasizing similarities and ‘mitigating dissimilarities’ (p.167) through effective communication.

Determining Managerial Roles and Responsibilities ‘Allowing the acquired company’s managers to maintain responsibility for activities central to its core operations will help to accelerate integration by minimizing gaps in performance or production. Ideally, the acquiring management should audit and counsel the existing management, augmenting it where it is weak but leaving the previous management team intact until key processes have been successfully incorporated into the merged firm’s operational infrastructure.’ (p. 169) Defining the character traits required in the new organization, and then identifying people possessing these assists in the selection of the management team that will best achieve strategic objectives. Staffing decisions must be made early in the integration process to avoid employee uncertainty, which can impact on productivity.

Measuring Results The integration program must have measurable criteria to assess the progress of the merger. ‘Must strive to set forth measurement criteria wherever it is possible to do so, whether it is by setting time parameters by which certain integration tasks must be completed, by gauging attitude changes via employee research, or by tracking the number of people who stay with the merged company against expected levels of attrition.’ (p. 175)

Acknowledging the Two Levels of Integration ‘The key to a prompt and effective integration launch is focusing on the similarities inherent in each organization and building on them.’ (p.175)


‘The key to successful integration is identifying the similarities inherent in each organization and building on them while maintaining a disciplined yet flexible approach…’ (p.177) ‘Isolating common factors and focusing on similarities provides the essence of the growth planning approach to devising and implementing a successful integration strategy.’ (p. 177)

MEASURING MERGER SUCCESS

Keeping Track of Success: Merger Measurement Systems

[12] Timothy J. Galpin, Mark Herndon

The benefits that arise from a formal tracking process are (p.145):

  • ‘Determining whether the transition is proceeding according to plan
  • Identifying “hot spots” before they flare out of control
  • Ensuring a good flow of communication
  • Highlighting the need for midcourse corrections
  • Demonstrating interest in the human side of change
  • Involving more people in the combination process
  • Sending a message about the new company’s culture.’

‘Four areas for which separate but interrelated measurement processes must be continually managed during merger integration’: (p.145)

  • Integration measures: assess the integration events and determine whether ‘overall integration approach is accomplishing its mission of leading the organization through change.’ (p.145)
  • Operational measures: track ‘any potential merger-related impact on the organization’s ability to conduct its continuing, day-to-day business.’ (p.145)
  • Process and cultural measures: determine the ‘status of merger-driven efforts to redesign business processes or elements of the organizational culture.’ (p.145)
  • Financial measures – track and report whether the company is achieving its expected synergies.

(Examples of measures used for the above are included on p.145)

Integration Measures ‘Merger measurement systems need to evolve as the integration evolves into each successive phase.’ (p.146) ‘Near the end of the project, it is essential to capture feedback, learning, and process upgrades that can be used to build an ongoing institutional knowledge base regarding the integration process itself.’ (p.150)

Refer to p.150 for Automated Feedback Channels – several interesting points regarding use of IT in integration.

Operational Measures The company should establish and communicate critical success factors. These critical success factors ‘summarize the essential strategic business outcomes that must be achieved.’ (p.152) (Diagram on p.153 provides a summary of the process involved in defining operational measures)

Process and Cultural Measures A ‘formal process for measuring the effectiveness of major merger-related redesign and cultural integration efforts’ (p.154) should be created by the company to track progress. One method for this is the ‘Merger Integration Scorecard’ which provides a status update showing the progress of the most important critical success factors in key measurement categories. An example of this is provided on p.159-161.

Financial Measures Four components are recommended to ensure a company identifies and achieves its essential objectives (p.162):

  • ‘An education process
  • A verification process
  • Document templates for submitting, tracking, and summarizing the achievement of synergies
  • A process for reporting and communicating the achievement of synergies.’

It is also important to identify the sources of synergies. Synergies typically come from: (p.163)

  • Income generation – ‘produce efficiencies whereby increased production is achieved via changes to processes, new or different equipment, new products, new channels for sales or distribution, enhanced quality, new management techniques, or best practices.’ (p.163)
  • Expense reductions unrelated to reductions in staffing expenses – result from the avoidance and reduction of costs that were made possible due to the integration.
  • Avoidance of capital outlay – ‘involve any reduction in planned use of capital, or in the scope of capital projects, that is made possible by improvements in plant use or by the sharing of resources.’ (p.163)
  • Expense reductions related to reductions in staffing expenses – ‘involves the elimination of redundant roles, positions, or units when these reductions are attributable to the integration.’ (p.163)

BENEFITS FROM INTEGRATION MANAGEMENT

Integration Managers: Special Leaders for Special Times

[13] Ronald N. Ashkenas, Suzanne C. Francis


(Article basically covers the role of integration managers, and looks at case studies involving integration managers)


‘Integration managers help the process in four principal ways: they speed it up, create a structure for it, forge social connections between the two organization, and help engineer short-term successes that produce business results.’ (p.183-184)

‘The integration manager can clear paths between the two cultures by facilitating the social connections among people on both sides.’ (p.191) This can help to overcome the problem of culture clash.

Five personality factors that are likely to increase the success of individuals in the role of integration manager are (p.196 – 201):

  • Deep knowledge of the acquiring company
  • No need for credit – ‘The integration manager cannot be concerned with getting credit – or even recognition – for an effective integration.’ (p.198)
  • Comfort with chaos – The integration manager need to have strong project management and organizational skills. ‘The best integration managers keep the process moving by constantly recalibrating their plans.’ (p.199)
  • A responsible independence – Needs to be able to take initiative and make independent judgments, as there is no one providing instructions for what they need to do. It is also ‘vitally important that the integration manager have – or win – the trust of the most senior executives in his or her company.’ (p.200)
  • Emotional and cultural intelligence – Integration manager must be able to understand the emotional and cultural issues that are involved in a merger, and recognize that it isn’t just an ‘engineering exercise’, but involves people.


Summary, p. 202 – 203 ‘What Integration Managers Do’

Inject Speed

  • Ramp up planning efforts
  • Accelerate implementation
  • Push for decisions and actions
  • Monitor progress against goals, and pace the integration efforts to meet deadlines


Engineer Success

  • Help identify critical business synergies
  • Launch 100-day projects to achieve short-term bottom-line results
  • Orchestrate transfers of best practices between companies

Make Social Connections

  • Act as traveling ambassador between locations and businesses
  • Serve as a lighting rod for hot issues; allow employees to vent
  • Interpret the customs, language, and cultures of both companies

Create Structure

  • Provide flexible integration frameworks
  • Mobilize joint teams
  • Create key events and timelines
  • Facilitate team and executive reviews’ (p.202 – 203)



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