Image by Robert-Owen-Wahl from Pixabay
Mergers and acquisitions (M&As) might seem simple in small business. But for success in either small or big business, M&As are a complex process.
Why? Compatibility in cultures is always a major consideration.
To use a metaphor, acquiring a business is much like building a healthy, great-tasting salad. The right mix of ingredients and seasoning are needed to greatly enhance your success.
Here are five key ingredients:
1. Due diligence
Before you agree to buy another company, due diligence requires several action steps.
They include a SWOT analysis. You must determine the strengths, weaknesses, opportunities and threats.
Surely, you have to investigate the company’s eight tangible and intangible assets:
— Quality of its business plan
— Strength of its financials and assets
— Effectiveness of its operations/business processes
— Branding
— Use of cutting-edge technology
— Whether it has a strong reputation
— Evaluate its opportunities for growth and obstacles for success
— Quality and compatibility of its culture, talent and human resources approach
Note: Of all of the listed assets, the latter is most important. More on that in the Coach’s Corner at the end of this article.
The other assets are important, but it’s much easier to grow that company if its culture is compatible with you.
2. Objectives
Are moving ahead with the acquisition? Great, now you should identify your objectives.
Create a comprehensive plan of action so that everyone is on the same page. Each person should understand the goals, responsibilities and timing.
3. Communication
Creating trust is paramount. Even if everyone is apprised of their goals, responsibilities and timing, you can still anticipate people will fear the change.
For maximum trust in all communication, convey respect and transparency. Never forget to use either of the two phrases that enhance communication in 98 percent of the time. Those are “please” and “thank you.”
Share your goals and vision for growth. Let employees know how their roles contribute to the success of the objectives.
4. Issue management
Despite your best planning, anticipate tsunamis. They’re a fact of life. If you’ve performed a SWOT analysis and developed an action plan, you’ll be in the best possible situation to overcome obstacles.
5. Continuous evaluations
Again, the two cultures will have differences. Wherever possible, align the differences to meet your goals. Look for areas of commonality.
The acquired employees will be appreciative if you don’t expunge what works well for them just for the sake of making change. It will help boost their pride in the organization and confidence in you.
From the Coach’s Corner, related information:
If Mergers & Acquisitions Tempt You, Consult Your HR Pro First — There are five pitfalls to avoid in mergers and three A’s needed for success. If you’re contemplating a merger, be very careful about your human capital – whether you’re in government, a small business or a global company. Investment bankers salivate over the prospect of new mergers, but senior finance executives need to listen to human resources experts to insure success.
Risk Management – Making Best Decisions, Using Right Tactics — To prevent a crisis from interfering with the continuity of your business, you must strategically plan to manage any potential risks. That means avoiding the classic mistakes routinely made by companies, and making the right decisions for proactive measures to minimize any dangers. But how can you best manage risk? Incredible as it might seem, companies fail because they underestimate strategic risks – yes, strategic blunders instead of common sense – according to an authoritative study.
Strategic Planning Lessons: Why United Airlines Was Forced to Merge with Continental — United Airlines (UAL) was forced to merge with Continental Airlines because of anemic strategic planning. It was a $3-billion merger with about 1,200 jets and more than 86,000 workers. Sadly, after eight decades, UAL’s logo is history. The Continental logo remains. The merger entailed a mega review of 2,000 policies and procedures.
A dentist and a manicurist married. They fought tooth and nail.
__________
