It is estimated that 70 to 90% of mergers and acquisitions would end in failure (according to figures reported by the Harvard Business Review). These large-scale operations are indeed very delicate to carry out and many factors can jeopardize their smooth running: resistance to change, a drop in business growth, budget overruns, strong cultural differences, etc. The consequences can then be very serious and threaten the survival of the company.
To maximize the chances of success of your merger project, it is important to adopt a rigorous methodology and to know some good practices.
Assess risks and anticipate future challenges
Even before signing the transaction, it is essential to carefully assess the risks associated with such an operation, from a financial, but also human, legal and commercial point of view.
To do this, it is first and foremost necessary to clearly define the objective of the fusac : Is it with the aim of diversifying the activity? As part of an internationalization project? To strengthen its competitiveness on the market? Or simply to grow your business and increase your turnover?
In a second step, it will be necessary to carry out a thorough due diligence of the targeted company and analyze its commercial positioning; the local market; supply, demand and competition; the growth rate of the company; the quality of the products or services; the communication strategy…
This acquisition audit will validate the compatibility between the target company and the acquirer and measure the potential of the M project, as well as the strengths, weaknesses, areas for improvement and possible future challenges.
Negotiate the terms and conditions of the merger-acquisition
A second decisive step in the smooth running of the MA (Mergers and Acquisitions) is the negotiation phase, and the choice of the most suitable type of merger: full buyout; partial sale; merger-absorption; merger by annexation; merger-creation; joint venture…
To secure this transaction, it is essential to be accompanied by legal, financial and tax experts (notary, lawyer, chartered accountant, etc.), who are able to define the most favourable terms and conditions of the contract.
Ensuring employee engagement and overcoming resistance to change
As with most restructuring projects, resistance to change is one of the major obstacles, and one of the most common causes of failure.
For a successful M, it is therefore essential to ensure employee engagement. The mission of the local manager is therefore to transmit to the teams the final vision attached to the merger project. He will also have to present, in a transparent manner, strategic issues, as well as financial, commercial and human benefits.
Line managers will have to listen fears and doubts of their employees, and reassure them effectively. It will also be useful to Identify key collaborators, essential to the smooth running of the M, and ensure their full buy-in to the project.
In addition to employees, it will also be necessary to involve all stakeholders in the merger project (building customer and business partner loyalty, reassuring investors and shareholders, exchanging with suppliers and service providers, etc.).
Facilitate integration into the new structure
Integration is the most delicate and risky phase in an external growth operation. A rigorous strategy must therefore be put in place to ensure the proper integration of the absorbed company and to protect against the risks of loss of growth and employee disengagement.
To ensure a harmonious and successful synergy, it will first be necessary to ensure that employees are well prepared for the changes to come, and to encourage them to be adaptable and open-minded.
Indeed, this type of profound transformation disrupts all benchmarks, and often represents a real challenge for teams who must adapt to a brand new ecosystem: the management style, the working atmosphere, the way of organization, the tools and practices, the company’s culture and its values can indeed be radically different from one organization to another.
Facilitating this transition will require close and transparent communication, as well as regular one-on-one communication with employees to ensure that they understand the strategic directions of the new entity.
Hiring an interim manager to make a successful M
Given the risks, challenges and complexity of an MA transaction, it is particularly wise to outsource your MA transaction to a seasoned expert, such as an interim manager.
At WAYDEN, an interim management company, we identify, among our network of 2,000 talented executives and managers, the profile best suited to your needs, and specialized in the management of M transactions. Thanks to his long career, his sector know-how, his neutral outlook, his human qualities and his unparalleled managerial skills, this high-ranking leader will be able to secure the transaction and ensure the success of the merger project.
