Companies are ambitious to grow: they grow their market presence and capacity to bring in more revenues and profits; grow their stakeholder experiences. At the same time, some of them look for other companies in the market having a synergy with their operations to either merge with them or acquire them. This route to get bigger, often referred to as inorganic growth, makes the two companies come together and become a larger entity in terms of market image, human resources and other assets. However, the inorganic growth path brings new challenges to the management teams of both companies and they need to have the wherewithal to see these through.
What challenges are we talking about?
Every business is unique in its beliefs and practices. When two businesses join hands together, not all the practices and beliefs are in alignment. Some of these practices and policies have to be unified and harmonised. Acknowledging the need to change and then, implementing the same is not easy.
Secondly, the approach of the top teams towards one another makes it either easy or difficult to grow together. The feelings of being vanquished and conquered do not help; neither does the feeling of being a victor and powerful help. The fact is that both parties bring their unique strengths and while coming together, they have to leverage one another in such a way that the overall results are stronger and bigger than the mere sum of the two organisations. Hence, both sides have to learn to appreciate the value the other brings and proudly acknowledge the complementarity and synergy generated by the combination.
Financials matter
After all, it is a financial and legal transaction that consummates any deal. Through this process, both parties negotiate hard to maximise the results for them. During the process, it is quite common to expect that some not-so-pleasant interactions happen. Senior leaders on both sides have to behave maturely to ensure that the injuries are healed soon by acknowledgements and kind and welcoming gestures. During a transaction and negotiation, it is important to ensure that the vulnerabilities of either party are not exploited and a certain balance is achieved to finalise a deal. Else the working relationships may not blossom forth and the much-awaited synergies remain on paper only.
Leading the way
Given the limited window of time available for a transaction to fructify and the integration process to complete, leaders hold the key to success. They have to demonstrate a fine balance between their ambition to complete the process quickly, the need of optimising the costs involved in the process and the rigour needed to carry out the processes effectively. Sometimes, mergers and acquisitions fall flat because of the incompetence of the integration leader. Either the leader does not have enough knowledge and experience in integrations or operates with a lopsided view of the context and the processes. Hence, companies need the right people involved in the process right from identifying an opportunity and making a pitch to scrutinising it closely, structuring it right and negotiating the terms. Once a deal is agreed upon mutually, an equally significant chapter begins to integrate two entities with their unique cultures, practices, norms and strategies.
For the integration, we not only need the right attitude of give-and-take but also the wisdom, competence and bandwidth to handle the entire process with a high degree of sensitivity, meticulous planning and rigorous execution; also with prompt and appropriate communication.
