Tips for a successful post-acquisition integration

According to Harvard Business Review, between 70% and 90% of mergers and acquisitions fail. It’s a shocking number, and the one thing they all have in common is people. Mergers and acquisitions fail more often than not because key people leave, teams don’t get along or demotivation sets into the company being acquired.

We often hear employers saying people are our biggest asset however, this is never truer than during an acquisition.

The integration of two businesses may start off well, with the two parties being on good terms, but if the acquiring business is not clear on expectations, the relationship can quickly become strained with conflicts of opinion on the best way forward.

HR and M&A:

Five things HR must get right in a merger

Preparing for the impact of acquisition

M&A deals: What role for HR?

The target business is likely to feel the change overnight with the employees set to embark on a challenging change management programme, involving building relationships with new people from a different business.

So, how do you get it right from a people perspective?

Not surprisingly the employees of the target business are likely to be suspicious, fear the prospect of redundancies and the potential of significant changes to their current working arrangements.

These are natural feelings but without HR addressing these concerns, there is a very real risk that employees will develop their own narrative on what’s going to happen and the rumour mill starts.

Therefore, the first step prior to the announcement is to have a robust communication strategy for all employees, outlining why the business was acquired, the expected synergies as a result of the acquisition and what it means for employees.

Here, it’s important to communicate key areas of concern such as any changes to job titles, changes to pay dates, any proposed job losses and the future organisational structure. While this information may not be available immediately, it should be a priority to share this as soon as possible. It’s important, too, to outline how frequently employees can expect to hear updates.

The next step is to involve employees in the integration activities – this is key and often overlooked. Collaboration is the name of the game here.

Don’t assume the processes in the target business are not as good as the acquirers, there is no quicker way to disengage the target employees than forcing the acquirer's processes on them without due consideration of what currently exists.

And don’t forget about communicating with the acquiring company’s employees, they need to know why the acquisition is taking place and what it means to them.

With this in mind, introducing the target employees to their counterparts and teams in the acquirers organisation should be prioritised. This can be tricky to navigate as both sets of employees may feel threatened by the other and concerned about their future.

It’s a good idea to run change management workshops for all employees and them the opportunity to become change champions.

This helps with employee engagement and getting key messages out to the wider workforce as employees are more likely to listen to colleagues than a senior manager they don’t know.

While some cultural assessment may have been done at the pre deal due diligence, it’s important that any introduction of values and behaviours are initiated early in the process as this will help embed the target business into the overall business – ideally facilitated workshops work well.

Typically, key talent is discussed during due diligence and there is a tendency to accept this list as who you need to retain. We would always propose waiting until the announcement is made and scheduling one-to-ones with those who were identified to satisfy yourself that they are indeed the right people to retain.

While the risk of getting it wrong is high, taking the right action and involving the right team of professionals at due diligence through to post-acquisition integration will greatly reduce the risk and increase engagement in both businesses. Therefore, finding an HR consultant who can lead the people stream is an essential component of the programme and shouldn’t be overlooked.

 Fiona McKee is founder of the HR Practice