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Challenges of Mergers – Changes

If you’ve ever been involved in a corporate merger, or your company was acquired by another, you understand that the integration of the companies is a complex effort. Mergers can fail for a variety of reasons including culture, technology, politics or power struggles.

My father worked for Burroughs back in the 70s and 80s and they merged with Sperry/Univac to become Unisys. The joke at the time was the merger was the combination of two $5 Billion firms into one larger $5 Billion firm.

I have seen cases where the big company absorbs a small company, and years later the ex-employees of the smaller company still refer to themselves as affiliated with the old company. There is a pride to the nimbleness and success of the smaller company (there had to be success as “They” were acquired.) There is also a sense that they did things better at the smaller company. “When we were on our own, we didn’t have all of this administration.” This pride, and sometimes resentfulness, can slow the integration of the companies and can limit the success of the integrated companies.

The obvious goal of acquisitions is to be better as a combined company—better as the result of revenue growth, or competitive advantages, or increased geographic coverage, or expanded markets, or a combination of any of these.

Key to any successful acquisition is to keep the sales of the acquired company growing as the companies become integrated. Sounds easy, right? You tell the sales team of the acquired company that they are the best thing since Marky Mark and the Funky Bunch and that everyone will be taken care of on the other side and to go out and sell, sell, sell.

Yeah, right. Unfortunately, employees and sales teams aren’t always able to focus and continue to achieve the sales results once an acquisition occurs. People are concerned about changes.

Change is disruptive. Change is often met with resistance. During the integration of acquired companies people are unsure of how things will work as the companies come together. There is fear of job loss, there is fear of loss of autonomy. Fear of new management, processes, team mates and more. All this leads to declined productivity of the acquired company. Extend this out to their channel partners and it gets really complicated.

What can you do about it? Like they used to say about Philadelphia elections “vote early and often” companies should communicate with the acquired company and their channel partners early and often. On of your biggest challenges will be that you don’t always have all the answers immediately. The vision of the combined company is great, but people want details. They want to know the immediate impact to them.

One suggestion to keep sales humming along in the acquired company would be to put short term sales incentives in place—incentives that are significant enough to get the sales team and channel partners’ excited and away from getting too focused on the changes.

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