The financial media is reporting a noted cautiousness by companies in terms of considering a merger. With debt concerns stretching far into and beyond 2010, coupled with a still volatile market, M&A activity is down 4.4% from last year- when we were in a recession.
80% of Mergers are a failure
The reasons for lack of merger success are numerous and complex. However, often an employee supposes that upon completion of the M&A, it will be business as usual. The reality is that M&A needs to be recognised as a long-term plan, which will involve change. Thompson Dunn has observed the major challenge encountered by companies to be a lack of appreciation for differing cultures. As a company with an international client base, Thompson Dunn confronts this dilemma (individual values, beliefs and leadership styles) on a daily basis.
Edgar Schein, writes that “culture matters because it is a powerful, tacit, and often unconscious set of forces that determine both our individual and collective behaviour, ways of perceiving, thought patterns, and values.” It is absolutely crucial to understand this when organising a merger, as these cultural elements determine strategy, goals and modes of operating. This could indeed be the fundamental factor that determines whether the new company is efficient and successful, or adds to the 80% of failures list.
The largest pitfall: Inefficient Communication
Thompson Dunn believes that the largest pitfall on the way to a successful merger is inefficient communication. In order for customers, shareholders and specifically employees to redirect their action to the value-added deal, top management needs to provide the crucial details, and stray from uncertainty and lack of informative answers.
To address this, cultural communication preferences must be taken into account. The two companies may share the same goals, but have different ways of getting there so it is fundamental to take cultural differences into account.
Thompson Dunn prides itself in striving to understand not only the goals of a company, but how they feel comfortable in achieving them. We bring people together across the new organisation face-to-face and value past achievements and backgrounds, taking the context of the previous organisations into account.
We encourage people to share their hopes and concerns for the future, develop and share a sense of purpose and identity and re-activate their desire to take initiative. This creates a new culture, driven by the strategic intent of the merger, where a whole is more than the sum of its parts.
Read more about Human Due Diligence.
Read more about Mergers and Acquisitions.
By Marc Jacobson
The Human Side of Mergers and Acquisitions
The financial media is reporting a noted cautiousness by companies in terms of considering a merger. With debt concerns stretching far into and beyond 2010, coupled with a still volatile market, M&A activity is down 4.4% from last year- when we were in a recession.
80% of Mergers are a failure
The reasons for lack of merger success are numerous and complex. However, often an employee supposes that upon completion of the M&A, it will be business as usual. The reality is that M&A needs to be recognised as a long-term plan, which will involve change. Thompson Dunn has observed the major challenge encountered by companies to be a lack of appreciation for differing cultures. As a company with an international client base, Thompson Dunn confronts this dilemma (individual values, beliefs and leadership styles) on a daily basis.
Edgar Schein, writes that “culture matters because it is a powerful, tacit, and often unconscious set of forces that determine both our individual and collective behaviour, ways of perceiving, thought patterns, and values.” It is absolutely crucial to understand this when organising a merger, as these cultural elements determine strategy, goals and modes of operating. This could indeed be the fundamental factor that determines whether the new company is efficient and successful, or adds to the 80% of failures list.
The largest pitfall: Inefficient Communication
Thompson Dunn believes that the largest pitfall on the way to a successful merger is inefficient communication. In order for customers, shareholders and specifically employees to redirect their action to the value-added deal, top management needs to provide the crucial details, and stray from uncertainty and lack of informative answers.
To address this, cultural communication preferences must be taken into account. The two companies may share the same goals, but have different ways of getting there so it is fundamental to take cultural differences into account.
Thompson Dunn prides itself in striving to understand not only the goals of a company, but how they feel comfortable in achieving them. We bring people together across the new organisation face-to-face and value past achievements and backgrounds, taking the context of the previous organisations into account.
We encourage people to share their hopes and concerns for the future, develop and share a sense of purpose and identity and re-activate their desire to take initiative. This creates a new culture, driven by the strategic intent of the merger, where a whole is more than the sum of its parts.
Read more about Human Due Diligence.
Read more about Mergers and Acquisitions.
By Marc Jacobson