Sponsored by Leyard and Planar, a Leyard company:
Growing your company through mergers and acquisitions is like expanding your family through an overseas adoption. You may be highly motivated and have an open heart for the new addition, yet the change often includes challenges. Especially if you’re adopting an older child, overcoming cultural differences, language barriers, and differing ideas of normalcy can be taxing, even in the best of circumstances. To get it right, parents must develop the right strategies, and that requires advanced thought and planning.
The same is true for mergers and acquisitions (M&As). While M&As offer the opportunity to integrate new talent and technology, capturing the full benefits requires a great deal of strategy and forethought—especially as companies enter new geographies and embrace different languages and business cultures. And with M&A activity expected to accelerate in 2017, businesses need to make sure they get it right.
So how can they make these deals a success? Here are three things to consider:
1. Set Clear Roles and Responsibilities
Businesses are not spreadsheets. They are human enterprises—hindered by conflict, empowered by teamwork, inspired by leadership, and capable of remarkable achievements and devastating failures. Just like any relationship, the key to a functional working environment is defined roles and responsibilities.
Among the roles that need to be defined are who establishes transfer costs between the entities, who has the authority to set prices, and who leads the future service or product roadmap. Marketing and sales strategies also need to be precisely coordinated, especially if both companies have existing customers in the same market or region.
2. Develop Well-Defined Processes
Along the same lines, the acquiring company needs to clearly define processes. Whether it’s sales, marketing, IT, or operations, most companies have their own ways of doing things, and this can create confusion when organizations join together.
Take production, for example. Many large technology manufacturing companies use a stage gate or new product introduction process that ensures the right people provide input at various stages of the development process. By contrast, smaller companies with simple product lines and consolidated decision-making may follow more informal processes.
When merging a large company with a smaller one, the production processes of the combined companies must be clearly defined to avoid confusion and conflict. Will both companies’ production processes be retained? Will the smaller company adopt the larger companies’ processes?
It is in details such as this where the rubber hits the road. Either the teams work together to gain traction or they lose their grip and slide to poor performance.
3. Work to Create Teamwork and Trust
Another thing companies need to consider during an M&A is how they foster teamwork across the combined companies. The acquiring company can accomplish this by defining a set of measurable goals and then rallying employees to achieve them. By enabling employees with different perspectives to see the same set of facts and share the same sense of urgency, leaders can create a foundation for cross-functional teamwork.
Another important component of teamwork is trust—and that can be developed by openly communicating the plan of action, setting clear individual expectations, and maintaining an open dialogue as the two companies bond.
In the end, the success of any M&A depends on its people. With the right strategies and forethought, companies can reap the full benefits of their new talent and technology right from the start—ensuring their continued growth and competitiveness.
About the Author
Jennifer Davis is the CMO for the international business of Leyard and also serves as the vice president of marketing and product strategy at Planar Systems and Runco International. These roles put her in the center of the visualization technology industry for a variety of markets including digital signage, corporate offices, control rooms, broadcast, sports arenas, retail, and many more.