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Mergers are Seismic Events

by on January 23, 2014

Seismic Change

Mergers and acquisitions can be a seismic event for companies of all sizes.  Nothing even comes close.

Mergers require consolidation and restructuring.  Redundancies lead to downsizing.  Cultures clash.  Systems and processes must be reworked and reconciled. Policies and procedures get revamped.  The product line can double overnight.  Territories can now have time zone issues.  What was once the head office is now a satellite office.  The whole power structure can be altered.

All of this takes place at the same time, and all on display for the world to see.  Everyone’s watching – investors, shareholders, suppliers, customers, competitors and employees.  That’s life in the goldfish bowl.  

Mergers Shatter the Status Quo

If you’re a big company buying a small company, you may be able to take the same approach that VCs do when they make investments.  They swing for the fences betting on that home run knowing they risk striking out a lot.  They hope that 1 out of 10 deals will pay off.  But if you’re a small to mid-size company, you can’t afford to have even one bad deal.  They ALL count.

Mergers shatter the status quo.  Everyone seems rattled.  Everyone takes on new projects, is wondering “what does this mean to me?”, and trying to understand where they fit in the new organization.  Before long the destabilization begins to erode productive work time and management worries that the place is going to become overwhelmed with the change.

What do your instincts tell you to do?

The most common reaction from managers and executives is both wrong and rather pointless.  They feel compelled to stabilize things.  The natural tendency to manage change into submission, to make the situation settle down, is not the answer.  Managing, in their eyes, is about being in control, and these circumstances give them the feeling that they’re losing control.  So they try harder to muscle the merger toward stability.

Manage The Blur

It’s wrong and pointless because this thing is bigger than you.  You can’t force it to be stable.  It’s just not going to happen.  The best thing you can do is manage the blur.  Embrace the turmoil and turn it to your advantage.  With things in such a flux you have a window of opportunity during which you can do dramatic things.  It’s like having the license to make whole-sale changes, to take actions that are long overdue.

When Lumension, called Patchlink at that time, bought Securewave it was a major event for both companies.  Securewave was about 1/3 the size of Patchlink.  Securewave was based in Luxembourg, Patchlink in Scottsdale, AZ.  The status quo was shattered for both companies.

Instead of trying to pretend the event didn’t effect us we took advantage of the situation to change the name, brand and identity of newly combined company.  What was once Securewave became Patchlink, and Patchlink became Lumension.  The merger with Securewave was the key piece of the strategy of moving Patchlink from being a patch provider to being an endpoint security company, a much bigger and broader market.  The new identity trumpeted that change.

Changing the name and the marketing messaging was good for the company.  Everyone pulled together to work for the new name.  Yes, we had our own integration issues, you can’t avoid them, but we exploited the turmoil to make a drastic change that had to happen.

Pull The Trigger

With mergers, people are expecting change.  The energy level is up.  So pull the trigger.  Don’t squander the chance to do more than merely merge.

Integration Manual

The best way to manage the blur is to be prepared.  The best way to run an offense is if everyone is using the same playbook.  You need an Integration Manual.

I’ve created that Integration Manual and you can get it.  It provides:

  • A checklist of the key measures of every successful acquisition, from pre-deal to post-deal.  You will be able to anticipate problems before they arise and to plan well in advance each step in the process ensuring a successful transaction.
  • A comprehensive step-by-step process for effective communication, both internal and external, and key points to address in every integration communication.  This guide will ensure you speak to the employees of the target company in their language, and provide tools for communication executives that are making the announcements.
  • Each department is provided a checklist of deliverables at different stages of the integration, from LOI to Announcement, from deal Announcement to Closing, Closing plus 1 week, Closing plus 1 month, Closing plus 3 months, and Closing plus 9 months.  You will be able to layout and identify each aspect of every minuscule task that needs to be accomplished, making it easy to create an executive dashboard on the progress of the integration at every step.

p.s.

If you’re wondering how you build a company that you can sell for a premium in a few years, contact me to discuss the Valuation Amplification Process.

I also invite you to download the white paper and learn the 5 step process on How to Quickly Increase Your Valuation: a Proven 5 Step Process.  http://www.therevenuegroup.net/free-offer.html

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From → Integration, M&A, Strategy

One Comment
  1. Great article Mike. You hit the nail on the head – in a merger everything’s changing so embrace it and work with everyone to figure out how to make the most of it.

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