Keys to success with M&A

M&A, when done well, can help to revitalise businesses, however failure to ensure property integration can cause major problems. While M&A plans should be tailored to suit each individual company, there are some basic points that must always be considered regardless of the size or sector of the firms involved. Here's how to make the most of M&A and avoid the pitfalls.

Strategy
No matter how large or small the deal, the company will be irrevocably changed following a merger and this shift should not be ignored. An in-depth reassessment of strategy is required to shape and direct the post-takeover business.

The groundwork for this reassessment should be laid well before the deal has closed in order to establish a framework, which can then be used to inform future decisions about the business. Even if the deal does not end up going ahead, a redefinition of the business, its aims, processes and organisation, is useful at any point.

Ensuring your business has the right strategy to allow for growth is essential in order to maintain a competitive advantage even if the company itself is not currently going through an M&A transaction.

Organisational design
Fresh eyes are needed to look at the organisational design of a company following the closing of an M&A deal. It is key to ensure you have your strategy clearly defined and have all your staff on board with the new direction. The organisational design needs to be linked carefully to the new corporate strategy so the company has the correct infrastructure needed to execute its plans over the next five years.

If organisational design and strategy don't mesh successfully, this can impact negatively on your business. In the very worst-case scenario, there can effectively be two companies operating under the same roof. This can create endless inefficiencies and tension between staff members as job roles cross over.

Talent assessment
Once the strategy and organisational design are in place, the next step is to look at the 'engagement of talent,' - ensuring your staff members play to their strengths. Assessing the strengths of the staff and placing them in the correct roles can have a tremendous impact on the success of the new organisation.

Again, it is time to look at your staff with fresh eyes. Their talents should be evaluated against the specific core competencies required for key roles and not based on perception, positioning within the old company or previous performance – the job they did before the M&A may have required different strengths.
However, it is important to realise that if you buy a business and its people, the terms of their employment contracts cannot be altered just because they are in a new business. For more information, please refer to our article on Trust and Undertakings (Protection of Employment) Regulation 2006.

It is very useful to bring in external, neutral advice to perform the talent evaluation as existing people involved in the business may have preconceptions about which staff members belong where – something that could be damaging as the business tries to move forward. An external person will be able to view the transaction and the resulting needs of the new company far more objectively. This may also sit more comfortably with staff that are keen to have a non-biased viewpoint on their futures.

Employee engagement
Whilst assessing the talents of your staff, it is crucial to manage them well throughout the process. Poor management can lead to the business spiraling out of control very quickly, leading into a sour atmosphere and disillusionment amongst staff members.
To ensure employee engagement, a structured and effective communication process must be developed and incorporated into the M&A process. This can then be applied to both internal and external stakeholders.

Strong, fair management and excellent communication throughout will give staff a feeling of ownership of the process, which, in turn, boosts morale and increases the likelihood that the company will retain key employees.

So, if your business is involved in M&A transactions, is considering it for the future, or operates within a sector in which significant M&A activity is occurring, a structured and objective review of strategy, organisational design and talent assessment are crucial to realising the business' full potential.

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