What you need is a crisis! 2017 may have given you enough crises for a lifetime but times of crisis and chaos engender massive change. Whether the change is ultimately good for the bottom line is a function of the leadership and discipline of the management team. The organization’s energy can be easily and effectively channeled into those areas most critical to success:

• Seize the leadership advantage

  1. Capitalize on the strength of your leaders
  2. Evangelize the organization

• Focus on the customer base

  1. Boldly assess your organization’s ability and willingness to compete for business
  2. Paint a vision you and your customers can fall in love with

• Capitalize on existing major projects

  1. Unearth what the organization is really thinking and creating
  2. Provide proving grounds for emerging talent

• Reduce cost

  1. Protect the true value in intellectual and emotional capital
  2. Protect the true value in financial and operational capital

• Increase the value of key producers

  1. Answer the need for speed
  2. Prime yourself for innovation

• Manage productivity and output

  1. Guarantee solid opening moves and seize quick wins
  2. Speed up output and problem solving by maximizing the value of interpersonal relationships

• Increase effectiveness and speed of decisions

  1. Give people an understanding of what’s going on so they can engage themselves in the process
  2. Connect people to the vision through vivid storytelling

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“We paid too much. Is it really a good fit?”

Don’t let the desire to get your competitor’s customers cause you to pay too much for their company. There is a pretty good chance that their customer won’t stay anyway. Another tactic we commonly see is to buy “a geography” to expand a sales area. The risks there may be with your ability to serve (logistics) the expanded area effectively.

2. Insufficient Discipline, Depth and Breadth of Integration Planning

“Lots of activity with few results!”

Integration tasks and project management are common in your business, but often your integration manager has never managed a project at the whole-company level and across an acquisition. There is no time to “make it up” – get experienced help.

3. Declines in Productivity and Operational Performance

“Not enough hours in the day!”

Uncertainty about jobs, customers, suppliers, responsibilities, and structure is like walking through deep mud. It slows an organization down with the added distractions of second-guessing, “me issues”, and customer indecision. Communication and expectation management is critical during a transaction.

4. Culture Clash

“They don’t like us. We’re not so sure about them. Morale is sinking!”

Culture is best defined as “how an organization makes decisions”. Is it top-down, autocratic, concentric, bureaucratic…? Your culture will be different from theirs. The players and their responsibilities are different. During the integration, you have to create a temporary culture (that may become permanent); strong leadership and decisive action are required to do this.

5. Inappropriate or Ineffective Leadership Actions

“The organization lacks backbone!”

The top leadership will be hit with every little issue until a new decision making structure is put in place. Mergercoach’s Integration Project Structure can be implemented immediately and can be temporary. It is empowered with budget and associative resources (like people, span of responsibility, and capital). Keep the structure non-political and dominated by the buyer-side’s staff.

6. Loss of Key Players

“Strong swimmers jump first!”

The strong swimmers (aka your most talented and needed employees) will jump ship first. The competitors will be trying to recruit them away when you are the most vulnerable and distracted with all of the little stuff until a structure is in place. Aggressive re-recruitment actions (bonuses, special appreciation, and the like) are required to keep your best people on board!

7. Power and Turf Struggles

“Continuous “me” issues and politicking!”

The fear of losing one’s job or position of power is a strong motivator for politicking and back-room dealing. Again, your strongest ally will be communication and a solid re-structuring plan. Transparency with the key employees will help them understand the future of the company and their role in it.

8. Communications Are Unclear and Infrequent

“Too little, too late!”

Loss of control is hard for most people. Add lack of or incorrect information on top of that and they will lose faith in the future and harbor resentment towards the company. Having a solid communication outline will help you to walk them through the process without losing them to “what-ifs”.

9. Revenues Slip, Costs Escalate, and Stock Values Decline

“We turned our back on our customers & suppliers!”

While you focus your attention inward, trying to re-build your organizational structure and keep key employees, it becomes easy to neglect your customers and suppliers. This happens all the time to organizations going through an acquisition. This is why it’s necessary to re-recruit your salespeople and customer service representatives. They need to feel good about their future and then can focus their energy towards retaining and satisfying your customers. Your supplier relationship liaisons need the same treatment. They are the link to keeping your supplier resources in place.

10. The Transition Takes Too Long

“Maybe we will get it right if we take our time!”

Lengthening an integration process will only hurt you in the long-run. For the most part, people won’t embrace the change until they have to. Inactivity leads to second guessing which leads to fear and fear-based decision making. A lengthy integration process is usually a result of poor planning, not because that was the intended goal.

11. Lack of M&A Experience and/or Expertise

“Our existing management tools don’t work for this!”

There is a reason the majority of acquisitions fail to meet their goals. Your in-house, top-notch project managers or senior executives are not likely to be great acquisition managers. Why should they be? Mergercoach has spent decades and hundreds of acquisitions learning and understanding all the moving pieces of a transaction like this. They are very complex, not only from a due diligence perspective, but also the interpersonal perspective.

12. Tangled Decision Making

“It takes 3 days to get a memo approved around here!”

Integration planning is so crucial to every aspect of the business. A new decision making structure is a key component to this plan. Preference the buyer’s side management personnel when building your new structure, but be sure to give power to those on the seller’s side you need to keep. Set parameters for decision making around specific areas – ex. Joe Manager signs off on all our marketing efforts during the initial 90 day period while the marketing departments are being combined.

Be sure to check out Mergercoach Tools, like the Acquisition Project Plan or the Communications Template, to help your team plan for these risks and stay ahead of them.

The post Top 12 Merger & Acquisition Risks appeared first on Mergercoach - M&A Project Planning.

by Barbara B. Roberts, Tiger 21 Chair, and Murray B. Low

Entrepreneurs are different from other people. Their talent lies in imagining a new solution or a fresh approach that
gives the world something it may not have even realized it needed. Building a successful enterprise from start-up to sustained profitability demands total immersion. The company becomes the entrepreneur’s purpose, identity, primary community for relationships and the main and most meaningful way he or she spends time. Sometimes the company is passed on to the next generation, leaving a legacy that reinforces the founder’s identity and purpose. However, more often, the company is sold. What happens in this case? A sale may result in a financial windfall, but it can also leave the entrepreneur rudderless, facing a big question:

What comes next?

Download the White Paper

The post Selling Your Company – Exits appeared first on Mergercoach - M&A Project Planning.

Merger and acquisition activity is at an all time high. Not surprisingly, many believe that acquiring another company is a quick, easy way to add products and customers.

But most unions fail – One KPMG study found that 83 percent of merger deals hadn’t boosted shareholder returns, while a separate study by A.T. Kearney concluded that total returns on M&A were negative.

In addition to that, another trend has developed in the merger world – rampant, post-merger lawsuits. According to a study developed by Steven M. Davidoff and Matthew D. Cain, 97.5 percent of takeovers in 2013 with a value over $100 million experienced a shareholder lawsuit.

Uncontrollable economic forces and bad strategy are usually blamed when the deal goes south, but in truth the problem can almost always be tied back to unmanaged “people issues”. People issues like unfocused leadership, internal politicking, lack of communication and culture clash. But, with a little coaching and guidance, these issues can be isolated and resolved. Without a game plan, the deal is likely doomed.

Outlined here are 5 key issues to avoid.

1. Unfocused Leadership Responsibility

Many acquisitions are upended by politics. According to The Complete Guide to Mergers and Acquisitions, “When people see top managers merely jockeying for political position in the new company, putting little or no focus on the business, its customers, or its employees, the seeds of a failed integration are sown. Ensuring that someone in charge of the integration…can mitigate the politics and create a ‘back to business’ attitude.”

A solution that is becoming more and more common is to create a position of integration manager – either internally or by contracting with an advisor (like our Merger Coaches). Deep knowledge of the acquiring company and acquisition process enabled these managers to act as supercharged project directors. Integration managers need to be able to communicate freely up and down the organizational hierarchy and in and out of different departments to understand issues and make things happen that others in fixed roles would not have the ability to do.

2. Stakeholder Neglect

Because of the delicate nature of deal-making, it can be difficult to communicate with a merging organizations stakeholders. The uncertainty that develops from that secrecy is often hard for employees to handle.

“Will I lose my job?”

“Will my pay be affected?”

“Will I have to move?”

They want to know but because most M&A deals are restricted by rigid confidentiality agreements, it’s likely you won’t be able to answer many of their questions.

In this case, it’s best to be up front with them. Tell them everything you can and admit that there are some issues you are not able to discuss currently but may be able to address later. Help them understand the game plan for managing the transition.  If they understand how it will work, it relieves some of their concerns.

3. Losing Key Employees

Mergers provide a great excuse for unhappy employees to leave their positions. It is also a vulnerable time for “talent poaching”. It’s not uncommon for competitors to approach your best people, hoping to leverage the uncertainty of the future that comes with an acquisition.

The best plan of recourse in this time is to identify the critical people in both organizations needed to get the deal done and for successful integration at all levels in the company.

Your retention strategy should include both financial compensation and assurances about the future. A basic rule of thumb is to offer your key people a bonus of half their salary to stick around for one year. This bonus should be tied to performance measures or deliverables. Loyalty to a company is heavily weighed by the assurance that one will play an important role in the future of the new organization.

4. Losing Existing Customers

It’s common for organizations going through an acquisition to lose focus on external issues. This period is blighted by poor sales numbers and increased customer complaints. When sales people suffer in concurrence with a merger, they commonly question the vitality of the deal and the company they represent.

Likewise, customers may worry they won’t be able to get the attention they need or desire while you are so inwardly-focused on combining your businesses. It’s important to single out important customers or those that can be particularly sensitive ahead of time and be prepared to communicate frequently and take extra measures to reassure them. Strategies like special sales incentives and customer service communication plans that emphasize the company’s continuing commitment are crucial to surviving the transition.

5. Culture Clash

When two businesses are combined, there are four possible organizational outcomes for these different cultures: 1.  there will be two distinct cultures, 2. all policies from the acquiring company will be forced onto the acquired company (or vice versa), 3.  a mix-and-match policy from both firms or, 4. the creation of an entirely new culture. The nature of the deal and the nature of the companies dictates which cultural approach is appropriate. However, regardless of the circumstances of your deal, clear communication and forthrightness is always the key to navigating cultural integration.

Integration works best when you start thinking about the people issues during the due-diligence phase of merger negotiations and continue thinking about them well after the deal is done. Realigning employee motivations, expectations and everyday work environment will be a lengthy process that will require a lot of guidance from senior leadership and the HR department.

Getting the Human Resources department involved as early as possible is integral for a successful merger. Speed and accuracy for the deal is greatly increased by HR’s ability to address issues of redundancy, compensation & severance, and future staffing while the merger negotiations are still happening.

The sooner you can start addressing “people issues” and planning for them, the better you can hedge your bets against merger failure. Mergercoach has been involved in over 300 acquisitions and we have learned that these same people problems present themselves every time, regardless of industry or organization type. The good news is that we know what to expect and how to responsibly deal with issues as they arise.

For more information on coaching from Mergercoach, click here or contact coach@mergercoach.com.

We also recommend the Mergercoach Communications Template to help you prepare for questions your people will have and how to best guide your team through this tricky process.

The post Save Your Acquisition appeared first on Mergercoach - M&A Project Planning.

What buyers miss is that the organization must still go through all the predictable change dynamics – the change curve.

The acquisition has been made and here’s the scenario: You’ve trained everyone, you’ve invested time and money in the latest systems and processes and you have prepared them to succeed in the new corporate environment (or so you think.) Yet months later, people still persist in their old ways: Where are the business improvements you expected? And when will the disruption you’re experiencing subside?

The fact is that organizations don’t just change because of new systems, processes or new organization structures. They change because the people within the organization adapt and change, too. Only when the people within it have made their own personal transitions can an organization truly reap the benefits of change.

With managing an acquisition, the challenge is not only to get the systems, process and structures right, but also to help and support people through their individual transitions (which can sometimes be intensely traumatic; involve loss of power and prestige… and often employment.)

The easier you can make this journey for people, the sooner your organization will benefit from the merger and the more likely you are to be successful. However if you get this wrong, you could be heading for acquisition – and career – failure.

The Change Curve is a popular and powerful model used to understand the stages of personal transition and organizational change. It helps you predict how people will react to change, so that you can help them make their own personal transitions, and make sure that they have the support they need.

The Change Curve is widely used in business and change management and there are many variations and adaptations. It is often attributed to psychiatrist Elisabeth Kubler-Ross, resulting from her work on personal transition in grief and bereavement (The Grief Curve).

The Change Curve

The Change Curve describes the four stages that most people go through as they adjust to change.

When the merger is first announced, people’s initial reaction may be shock or denial. This reaction to the challenge in the status quo is Stage 1 of the Change Curve.

Once the reality of acquisition begins to hit, people tend to react negatively and move to Stage 2 of the Change Curve. They may fear the impact; feel angry; and actively resist or protest against the changes. Some will wrongly fear the negative consequences of change, while others will correctly identify real threats to their position.

“Will I get to keep my job? Will I have to move? Will my job responsibilities change?”

As a result, the organizations will experience disruption, which, if not carefully managed, can quickly spiral into chaos – and certainly won’t help you get the most of your acquisition.

You’ll also need to recognize that, for some, the change may affect them negatively in a very real way that you may not have foreseen (like personal and family impact on the individual as a result of the acquisition). Another example may be the individual’s perspective on self and their value. People who’ve developed expertise in (or have earned a position of respect from) the old way of doing things can see their positions severely undermined or eliminated by the change.

Stage 2 is a stressful and unpleasant stage and the longer people stay here, the more damage is done to your deal. For everyone involved, it is much healthier to move to Stage 3 of the Change Curve, where pessimism and resistance give way to some optimism and acceptance.

At stage 3 of the Change Curve, people stop focusing on what they have lost, start to let go and accept the changes. They begin testing and exploring what the changes mean, and so learn the reality of what’s good and not so good, and how they must adapt.

By Stage 4, they not only accept the changes but also start to embrace the changes: They rebuild their ways of working and only when people get to this stage can the organization can really start to reap the benefits of the acquisition.

Using the Change Curve

With knowledge of the Change Curve, you can plan how you’ll minimize the negative impact of the acquisition and help people adapt more quickly to it. Your aim is to make the curve shallower and narrower, as you can see in here:

As acquisition project manager, you can use your knowledge of the Change Curve to give individuals the information and help they need, depending on where they are on the curve. This will help you accelerate change, and increase its likelihood of a successful merger.

Actions at each stage are:

Stage 1

At this stage, people may be in shock or in denial. Even if the change has been well planned and you understand what is happening, this is when reality of the change hits, and people need to take time to adjust. Here, people need information, need to understand what is happening, and need to know how to get help.

We recommend using the Mergercoach Communications Template in this stage. The template helps you answer the questions people will have about the acquisition, including answered tailored to specific roles in the organization (i.e. management, employees, customers, suppliers).

This is a critical stage for communication. Make sure you communicate often, but also ensure that you don’t overwhelm people: They’ll only be able to take in a limited amount of information at a time. But make sure that people know where to go for more information if they need it, and ensure that you take the time to answer any questions that come up.

Stage 2

As people start to react to the change, they may start to feel concern, anger, resentment or fear. For the organization, this stage is the “danger zone.” If this stage is badly managed, the organization may descend into crisis or chaos.

So this stage needs careful planning and preparation. As acquisition project manager, you should prepare for this stage by carefully considering the impacts and objections that people may have.

Make sure that you address these early with clear communication and support, and by taking action to minimize and mitigate the problems that people will experience. As the reaction to change is very personal and can be emotional, it is often impossible to preempt everything, so make sure that you listen and watch carefully during this stage (or have mechanisms to help you do this) so you can respond to the unexpected.

Stage 3

This is the turning point for individuals and for the organization. Once you turn the corner to stage 3, the organization starts to come out of the danger zone, and is on the way to making a success of the changes.

Individually, as people’s acceptance grows, they’ll need to test and explore what the change means. They will do this more easily if they are helped and supported to do so, even if this is a simple matter of allowing enough time for them to do so.

As the person managing the changes, you can lay good foundations for this stage by making sure that people are well trained and are given early opportunities to experience what the acquisition will bring. Be aware that this stage is vital for learning and acceptance and that it takes time: Don’t expect people to be 100% productive during this time! Build in the contingency time so that people can learn and explore without too much pressure.

Stage 4

This stage is the one you have been waiting for! This is where the changes start to become second nature and people embrace the new organization.

You’ll finally start to see the benefits you worked so hard for. Your newly formed organization starts to become productive and efficient and the positive effects of the acquisition become apparent.

The post The Change Curve appeared first on Mergercoach - M&A Project Planning.

Culture
How to blend the cultures of two or more unique organizations is often overlooked during the flurry of activity that takes place when a deal goes off. However, successfully creating, communicating and implementing a new corporate culture for the go-forward organization is essential to long-term success. Just as people aren’t productive when they’re unclear about their career future, productivity drops when they lack understanding of the cultural expectations in their new work world.

Customers
During a transition the sales force and others who interact most with the outside world are often confused about what is expected, unclear about what to say or do, and uncertain about the future. As a result the customer is neglected, or worse: treated to tales of misgivings about what is happening. Customers begin to wonder if anyone knows what is going on. They begin to doubt that their own needs will be considered during this chaotic time, looking elsewhere for someone who can assure them they will get what they want, when they want it, at the price they want, with the service they deserve. Loyal customers begin to fall away. Revenues drop.

Connecting
People need to receive constant and consistent communications to keep them connected to the process of change. When people connect and commit, they produce value for the organization.

During change key producers feel energized if they are contributing and making a difference. They seek opportunities to understand what is needed, to be involved in decisions and actions. They are primed to produce information for task forces and project groups, to extend their enthusiasm to customers, and to examine innovative new ways to approach the opportunities change brings. They are ready and willing. The organization’s task is to recognize and leverage that willing ability.

Course Charting
A merger or acquisition is not done to cause organizations to be smaller, make less money, and work employees’ fingers to the bone—and mergers are not done to reinvent existing wheels or to lose key talent. Deals are done to work – plain and simple.

None of this happens accidentally. To achieve extraordinary results, a strategically planned transition must be developed. But it’s not enough to merely plan a stellar strategy. A complete solution must also include a way to get the thing off of the planning pages and embedded in the go-forward organization. Especially during mergers, it’s crucial to stay the course; keep focused. Creating a solid transition plan—and sticking to it—will keep you on track, and keep you focused on the vision for the new organization.

Communication
Communication, when used during times of significant change, engages all employees, delivers key messages at the appropriate time and in the appropriate manner, and facilitates the deployment of the new strategic vision.

Focus on three main categories of communication necessary during times of great change. MergerCoach works with our clients to customize a solution that effectively addresses these critical areas:

Strategic – What is the new vision for the organization?
Organizational – How will the organization’s structure shift?
Operational – How will the day-to-day operations be affected?

Getting the word out to the organization, suppliers & customers – sooner rather than later – that these issues are being addressed will keep your employees focused on maintaining productivity, rather than on speculating as to what’s around the corner. People can rally around a vision as long as they understand what tomorrow holds and how that impacts today.

The post Top 5 Acquisition Areas You Must Think About appeared first on Mergercoach - M&A Project Planning.

“InvestmentNews surveyed more than 1,000 adviser readers and asked them whether they planned to spend more on technology this year than they did in 2009. A strong majority responded in the affirmative — 63% indicated that they will be spending more, while 37% said they won’t….”

Read the rest of article on site redesign

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If you have enjoyed your YPO or WPO experience Tiger 21 membership is a natural next step. Tiger 21 meets in small, 12-14 person groups one day a month, just like Young President’s Organization, and you form close bonds with other members. Tiger 21 meetings are facilitated by professional chairs and feature presentations from well known speakers, processes such as “Porfolio Defense” (where other members closely review your portfolio) and timely discussion of world and personal events as they pertain to your investments, and issues of personal wealth management.

The other members have been there, done that, and provide an agenda free, supportive peer environment. It’s that one place where no one is trying to sell you something. The value of accessing other members’ intelligence and collective experience is priceless, and the relationships made can last for life. And of course your portfolio is a primary beneficiary. Contact us today to learn more.

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http://blogs.hbr.org/baldoni/2009/12/three_ways_to_keep_your_ego_in.html

The post Ego Management appeared first on Mergercoach - M&A Project Planning.

http://dealbook.nytimes.com/2009/12/11/terra-firma-sues-citi-over-emi-deal/?_r=0

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