Avoiding merger pitfalls: Seven tips
Improve your estimates
Be more conservative during the initial feasibility study. Assume your calculations of the benefits are order-of-magnitude correct, but quadruple the estimated time it will take to accomplish them. Next, take the best estimate of projected investments required to achieve the benefits, and multiply that number by 5-10. Finally, take the best intelligence on how this merger is going to negatively impact customers and suppliers, and bump that up by a factor of five times. That might be a reasonable approximation of a business case for the venture. If the figures based on this more-conservative scenario cause you to gulp, better read up on some of the horror stories of merger disasters in other organizations and check your medicine cabinet for antacids and tranquilizers.
If the merger looks viable, challenge your assumptions. Get a devil's advocate who will call you out if there are signs you are head-over-heels in love with a flawed strategy and blind to reality. Listen to that person and get other non-enamored individuals to enter the conversation. If it still looks right, then going on to the next steps is probably worthwhile.
Seven tips to improve the merger process
1. Spend as much time planning for the cultural integration as you spend on the mechanical aspects of due diligence, valuation of assets, contracts, negotiations, inventory, and other tangible aspects. If you create a team to handle the financial aspects of the transaction, have equally resourced teams to work through the culture integration.
2. Involve impacted individuals in decisions as early in the process as legally possible. Challenge any decision that is not transparent for anything other than legal disclosure reasons. Being open with plans has the impact of drawing the best resources into the concept so they do not bolt out of fear.
3. Double or triple the typical level of communication during the process, and continually stress the vision. The end state needs to be viewed by everyone as worth the hassle to get there. People become engaged and excited about a vision that holds the promise of a better existence for them personally.
4. Model good behavior at the top. Whatever attitude is observed among the top leaders will be replicated and amplified throughout both organizations. If the senior leaders are posturing for an unfairly large share or have an "us versus them" attitude, the general population will mimic that mindset.
5. Do not dump double or triple job functions on individuals and expect them to perform well. You will get minimal compliance followed by burnout.
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