Are There Blind Spots That Doom Post-Merger Integration?

denial
Are there blind spots that doom post merger integration? Yes. Business owners, after years of hard work, facing a payday, can be blissfully blind to cultural and leadership land mines. Triggered in the fog of post-merger integration, they cost organizations dearly, in terms of talent loss, workflow capability, and strategic alignment. I saw this blind spot six months ago in my local Starbucks ...
 
There I ran into a business acquaintance of mine (call him John). John is the CEO of a successful healthcare consultancy that has grown into a national player in the corporate health arena. I learned that John was out of the office studying an offer for the purchase of his firm by a large European conglomerate. The calculator was out and there was a look in his eye that said, “Leave me alone. I have been waiting my whole life for this moment." Nonetheless, I pushed into the conversation. I was puzzled because John had spent twelve years building a dream team to leverage his successful business model, vowing he would never sell.
 
My questions were basic:

"Would he retain his current leadership team?"

"How would he (they) handle a Europe-based boss?"

"What did he envision for how key roles would interact post-merger?"

“How would work systems, and the system-of-roles, need to change in order to support the merged businesses?"

“Was there sufficient time and other resources put aside for post-merger integration?"

Clearly caught off guard, John stuttered through a few unsatisfying, un CEO-like responses. He then excused himself, returning intently  to his calculator, focused again on the deal at hand (or perhaps more enamoring aspects of the deal).

“I’ll tell you how it goes,” he said.

But statistically speaking, we know how it goes. According to PWC's Annual Global CEO survey, 42% of CEO anticipate a domestic merger in 2013. At the same time it is widely accepted that fully one third of those deals will not even recover the cost of the deal.

What's really going on? Even in a world where deals are done to benefit dealmakers, there is still a common sense approach to due diligence that includes counting the real costs of successful post-merger integration, based on answers to questions liked those above.  Instead of being surprised, it pays to be prepared to address risks and spend the time and money upfront to do so.

Remaining blind is never a viable option.

For those who want to see, there are recent articles with helpful M&A news as well as linked resources:

--Forbes Post-merger integration

--CNBC M&A Success

--Growth River Post-merger integration work