4 ways M&A can transform your company

The opinions expressed by Entrepreneur contributors are their own.

Not all mergers and acquisitions (M&A) end well. In fact, 70-90% fail, mainly due to the inability to identify the appropriate fits for acquisition or the best ways to integrate them.

Maybe that’s why we hear such horrible stories: a corporate takeover where people at the acquired company wait for the other shoe to drop. I understand that perspective. One company takes over another and holds in its hands the livelihood of its employees – their careers, culture and security – with a high risk of failure.

But I also know how being acquired by another company can bring surprising results for professional growth. I am a living example of that.

Over the past two years, my firm has acquired a number of companies in different regions to accelerate our growth, each with its own client portfolio, industry expertise and merger timelines. Integrations have a lot of moving parts, but they are rich with learning opportunities for the next integration. My experience on both sides of M&A has taught me that each company must deeply understand the other company’s values, culture and decision hierarchy. Equally important are the people who make up the integration team. Those “in the kitchen” need to be open to building trust as quickly as possible to ensure the onboarding goes as smoothly as possible.

Related: Why prioritizing company culture is key to a successful acquisition

1. Align values

I joined CI&T six years ago, when they acquired my company. I was the HR director for a small advertising agency with many clients in financial services. We’ve been courted over the years by companies interested in acquiring us, but they weren’t the right fit as they were more interested in our customer relationships than our people. Our CEO believed in putting our people first and it was important to him that I was close to those conversations.

When we first met CI&T, they were intriguing — even though they were based in a different country. They instantly blew us away with their reality, honesty and transparency. We felt their values ​​in every interaction and realized that joining them would make us better.

Related: Are You a Leader True to Your Values? See how to align your leadership style with your values

2. Transparent communication

Communication is how we keep everyone aligned and involved. We have a meeting every Wednesday with each acquired company led by the integration lead on “their side” to provide updates on progress on various fronts – such as the integration timeline, branding, benefits, new gains, etc. From “our side”, we praise the people who were fundamental “in the kitchen”.

Even if the news is the same as the week before, we affirm that things are on track and if things delay, we explain the dependencies. If we are expecting something, we simply say it. Our goal is to make sure people know every step of the way. Full transparency is key.

Related: This Unique Leadership Template Will Transform Your Business and Ensure Success

3. Understand the culture

Understanding a company’s values ​​requires more than a motto—we need to understand the lived behaviors that reinforce the values ​​that make up the culture on a daily basis. How do they hire, reward and recognize people? How do they make decisions? What programs or rituals reinforce them? Where are they on a Friday afternoon? If they say they promote internally, what is their average tenure? How do they celebrate people and milestones? What’s the joke on your internal chat channels? What are your D&I metrics? Who is on your leadership team? What is their T&D budget?

In most M&A due diligence, many processes ignore corporate culture. Understandably, culture is not seen on paper, and CEOs of acquired companies may not describe it objectively. Let’s face it – they’re not the only ones asking. But not understanding the culture of the other company makes it easy to get it wrong. How to Date the Wrong Person – Those little things we overlook at first turn into bigger deals over time. Before long, we can’t get over what we used to ignore.

This is not to say that both cultures need to be identical for M&A success, but we must understand the differences and how to intentionally address them. For example, at CI&T, our culture is a learning environment, which means we bring lots of people into our meetings on a daily basis so they can listen and learn. It’s not uncommon for a meeting to have more than ten people, but only half actively contributing.

At first, this confused one of our acquired companies. Their hiring philosophy was to hire only experts and bring the people they needed to meetings. When we explained our culture, we decided together which meetings would have the most bandwidth for our approach. Yes, we discussed and agreed together on how to integrate their approach with ours. Flexibility to change is a good sign of a smooth transition.

Related: 7 deadly sins of merger and acquisition negotiations

4. Bring in the right people

Understanding a company’s values ​​and cultural differences early on makes it easier to put together the right communication plan and approach an integration. Including the right people should be more of an afterthought. They must be an integral part of the M&E process.

HR generally has better contact with the people of an acquired company and can provide a more realistic and objective picture of its values ​​and culture. Ideally, HR leaders on both sides are willing to “get real” real quick.

Perhaps many M&A efforts fail because understanding deeper aspects of a company, such as values ​​and culture, requires the involvement of the right people – not business people, not salespeople, but “people.” Even on the acquisition side, HR has a role to play in initial discussions – even more so for me as an acquired employee who has found success in my new role. I can guarantee new acquisitions: “Hey, you can trust these people.” I will be honest in saying that the process will not be easy, but these people are good and overcoming these challenges together makes us even better.

Leave a Comment