subject: The 7 Deadly Sins Of M&a According To Jack Welch In Winning [print this page] Mergers and Acquisitions are an important part of business. They can give your company a faster approach to profitable growth. Mergers and acquisitions may seem easy and straight-forward, but they can be treacherous if not done correctly. In the heat of the moment, when the negotiations are going on for the merger, there are many mistakes that can be made due to "deal heat." Deal heat is what happens when you make a mistake because you were blinded by emotions and ignore the facts.
There are seven mistakes that companies should avoid if they want to have a successful merger:
1. Believing a merger between two equals can occur
When two "equal" companies merge together, it is a recipe for disaster. The merger of two equal companies makes sense but does not actually work. When two equal companies merge they both think that their own way is the right; because if the companies are equal than the procedures of each company are. Thus the companies butt heads a lot and nothing gets done. There needs to be a leader and follower, that"s just the way it is. There needs to be one company that takes control over the other in order for a merger to work. They do not have to be totalitarian, but there needs to be a hierarchy of power.
2. Focusing too much on strategic fit and failing to focus on cultural fit
When a merger is occurring there are plenty of analysis on how the acquired company will fill the company"s gaps and how they will place in the market. This is obviously an important part of the deal. However, another equally important analysis is how the companies" employees will mesh together, employees who follow different values and missions. It is important to understand how the two companies will either synergize because the values and missions complement each other (best case scenario) or how they will clash. With regards to the latter, there needs to be a strategy on how to change the merged companies so everyone will be on the same page; if not, the newly merged company will still be divided internally.
3. Reverse hostage situation occurs
Sometimes, in the heat of a deal between two companies, the company doing the acquiring wants the other so bad that they allow the acquired company to take over. You have to make sacrifices to own a company you really want, but the key is to stay calm and remember you are in control.
4. Integrating too hesitantly- A merger should be complete in 90 days
Often companies that take over another will allow the recently acquired company time to settle and adjust to the new atmosphere. The culprit of this mistake is politeness and consideration. Acquirers feel they have to look good in order for the acquired company to like them and to stay positive. This is nice, but the real goal is to have the merger done in 90 days maximum. That means the management has to act and make moves even if they look like the bad guys; someone has to do it. If it takes more than 90 days, you know there is a problem.
5. Conquer syndrome- the acquiring company goes in to the newly acquired and replaces its own managers everywhere
This is a huge problem. It may seem like a good idea to put "your" people in the new company because they have proven themselves and know the protocol, however, there is a new talent pool to choose from when a company acquires another. The acquiring company has to take full advantage of this new talent and go through every position and analyze to see who is best for the job. It"s important to pick the best (no matter what side they are on) and replace or get rid of the others because that is business.
6. Paying too much for a company- so much you will never make it back
Again, in the heat of the deal, people do foolish things. However, one must stay conscious of not paying so much you will never see those dollars again. If it turns out that you cannot purchase the company without paying too much, than remember there is no such thing as the last great deal: there will be others.
7. Resistance
If you want to survive in a newly acquired company you need to stop resisting changing. It is normal to have animosity to an acquiring company when they are taking over yours, but remember they run the show now and if you are not on board than you can easily be replaced. It turns out the employees who make it through the acquisition and flourish in the new company are those who are enthusiastic about the new company and its values. For the acquirer there is nothing good about going into their new company and seeing a bunch of sour faces towards them. They want to see happy, enthusiastic and supportive employees. In mergers, the managers will always pick up the upbeat people about the deal. It is simple if you want to succeed in a newly acquired company go with the flow and be supportive.
Mergers and acquisitions mean change to everyone in the organization. Change is good; it means things are moving forward, without it there would be a stalemate. However, there are things one must be conscious of when making these changes. Mergers and acquisitions have their challenges, but "juice is always worth the squeeze" when done correctly.
