An Introduction to M&A Change Management

What is M&A Change Management?

Currently, one of the most underrated and poorly executed aspects of mergers and acquisitions is change management. However, what good acquirers realize is that people are their biggest assets because it is people who help companies reach synergy targets and IP goals; therefore, change management practices can be leveraged to identify and prioritize roadblocks to a deal’s success.

Why Change Management is Often the Forgotten in M&A

Because it is not tangible — we cannot always see what is being done like we can with traditional project management — change management is often overlooked or inadvertently forgotten. Unfortunately, it is when you start seeing what is not happening (people are not embracing new culture, work is not getting done properly, and synergies are not being met) that you realize change management is not being implemented. To combat this, M&A change management needs to be brought to the forefront and differentiated from project management.

When You Should Start Considering Culture

Culture is a key bucket of work in M&A change management. Cultural factors have been known to be deal killers; therefore, it is essential to begin considering culture as early as possible during exploration and diligence. Obviously, it can be hard to get access to some of this information early on, but simply paying attention during onsite visits and in conversations with members of the target company can be helpful. For example, consider how well do members of the target company exhibit qualities such as honesty and integrity? If they don’t come across as honest and of the highest ethical standards early on that could be a red flag on how much is actually true in the numbers they report or any information they provide throughout the due diligence stage.

Using Change Management to Identify and Prioritize Roadblocks

One of the areas in which change management can garner the largest impact is identifying deal and synergy killers. Using an impact analysis, change management team members can look at areas such as foreseen debt, differences in operational styles, and benefits and bring them to the forefront early on. Once these issues are identified, mitigation can begin, which ultimately gives these roadblocks less destructive power.

Here are some strategies for prioritizing and addressing issues related to culture and change management

  1. Look at what is high priority to employees and ensure they are dealt with quickly — again, people are key.
  2. Examine and gravitate towards roadblocks that line up with the key objectives of your integration.
  3. Another approach is to identify low hanging fruit — simple issues that can be quickly and easily rectified — this will allow you to gain some momentum.

Where and Why You Might Face Resistance

It is essential to remember employees from the target company might be resistant. Remember, they did not ask to come to the purchasing company. Some common feelings and signs of resistance are members of the target company may feel as though the purchasing company is of less value than them, or they are not interested in being a part of a new organization.

Key Takeaways and Final Thoughts:

Essentially, change management must include employees from all levels and geographic locations within a company, and it must be taken into account earlier in the M&A process. It is a weighty task and, therefore, ideally should be its own unique role within a company. One of the most vital aspects of M&A Change Management is managing cultural implications, especially because the lack of cultural consideration can kill deals. We must all remember people are our most valuable resource.

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