Mergers and Acquisitions-Busting a few Myths

During my long career, I am lucky to have been asked to facilitate 12 major mergers/acquisitions.  Each project lasted between one to five years; nine were successes; two were total failures (I was fired twice)  and one is still far too early judge.

Lots of myths exist in the domain of mergers/acquisition.  Mergers and acquisitions are a nightmare, filled with power struggles and severe anxiety.

The prevalent myths about the boundless opportunities of a merger remind me of the “happy happy fun fun” times promised around holiday time, when families get together, people get depressed , fat and/or drunk and trauma rooms fill up with attempted suicides.

In this brief post, I will share my lessons learned about the fascinating area of organization development in mergers and acquisitions.

  • There are no mergers-just acquisitions. One company becomes dominant and in a Darwinian struggle, the acquired company is partially digested. Even in the best of cases, the acquiring company remains with a case of mild indigestion whilst the acquired company is dominated.
  • It is impossible to take the best of two cultures and form new improved culture. The very claim that this can be done is pure alchemy, fake news and charlatanism. What does occur is a protracted Darwinian struggle between a stronger and a weaker culture which fizzles out about 10 to 15 years later, or when people from legacy companies leave or die.
  • Interpersonal trust is the most important glue that was ever invented. Trust is built in face to face meetings, intensive travel and lots of informal quality time together. Building trust in conference calls or on-line chats is like using a shower curtain as a condom.
  • For about a year, everything is a struggle: budget codes, travel policy, nomenclature, titles-it becomes a fucking bloodbath unless decisions are taken early. The more buy-in and agreement one tries to establish, the longer it takes to make decisions and the worse the fighting becomes. Fast authoritarian decisions taken quickly work best.
  • Managers who cannot build relationships of trust and transparency across geographical borders should be axed if they cannot adjust with 3 months.
  • If things are broken in the senior management team, the merger will fail. The senior management team is where most OD effort is needed.
  • Mergers and acquisitions are very painful for a long time. Expectations must be adjusted accordingly.
  • Cultural differences are important, but far less important than competency of senior management who manage these differences. Too often, poor management will blame cultural differences for problems that management could have solved if more brain power was available.
  • Many people who were competent in their legacy companies become incompetent because their former skills are not scalable or relevant.
  • Due diligence before mergers/acquisitions is highly flawed and tainted.  After the ink has dried, those who lied and/or misrepresented need to be pardoned or removed
That is no country for old men. The young
In one another’s arms, birds in the trees,
—Those dying generations—at their song,
The salmon-falls, the mackerel-crowded seas,
Fish, flesh, or fowl, commend all summer long
Whatever is begotten, born, and dies.
From Sailing to Byzantium-William Butler Yeats
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“A revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous. A revolution is an insurrection, an act of violence by which one class overthrows another.”
Chairman Mao
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A merger is a nightmare.
Chairman Allon

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