Integrating two companies is a project with many complexities that must be done right the first time. It is easily one of an organization’s top stressors and disruptors.
Three key pre-merger actions you need to take:
- Put due diligence on steroids
- Assign a Program Manager
- Integrate Communication
Action 1: Put Due Diligence on Steroids
Due diligence is typically focused on financial and legal topics of the merger. Do the following as well:
- Assess the acquired company’s infrastructure, with focus on IT and Operations with an eye to their tools, procedures, and policies. Prior to merger implementation, additionally get a snapshot view of the strengths, weaknesses of tools, procedures, etc. of your company. It will pay dividends during the merger implementation.
- Evaluate the cultural fit. Some mergers don’t work due to poor cultural fit. Make a culture checklist that includes both company’s risk tolerances and human resource policies as well as any other factors that might impact the merger.
- Consider outside resources for performing the operational due diligence. Select one of two scenarios: Two of your vice presidents talking with VPs of the acquired company, versus a trusted outside firm providing a review of all departments of the acquired company under the guise of doing a self-assessment.
Action 2: Assign a Program Manager
Executing a merger or acquisition is not something a business does every day. It’s large, impacts many if not all parts of the organizations, and at least initially, is a carried on in secret. Here’s what to look for in your program manager:
- The Program Manager is dedicated 100% to the merger, and therefore is not in an executive role in either organization during the merger.
- The Program Manager must be highly trusted and assigned to the role as early as possible.
- The Program Manager should have a very broad skill set, with experience working with as many functions as possible, such as sales, marketing, operations, IT, R&D, HR, and Finance.
- The Program Manager should be responsible for the development and timing of communications to both organizations.
- The Program Manager coordinates the implementation and merger of the two companies.
Action 3: Integrate Communications
Integrated communication to employees and managers of both organizations is critical to avoid chaos and rumors. In a merger, senior management may suffer from altitude sickness. That means they have ample understanding of the merger from the months of merger discussions, but an inadequate transfer of information to key managers who will be implementing the integration of the two companies. Take these steps:
- Prepare presentations appropriate to different levels of the organizations, so that all departments hear the same information.
- Ensure that the right managers have the right information in a timely manner.
- Communicate as honestly and directly as possible to include an open door policy during the merger implementation.
Ron Pettit is Practice Director and CIO/COO consultant for Virtual Information Executives (VIE). He brings a software engineering background from AT&T Bell Labs and twenty-five years of executive leadership skills in technology and operations management with domestic and international operations to VIE’s clients. He has worked in hi-tech, telecommunications, transportation, sales, open source, finance, healthcare, insurance, and the public sector. Outside of work, Ron pursues activities with his family such as hiking, gardening, exploring the Northwest and playing with his two dogs.