Mergers and acquisitions between companies are driven to relieve distress, bring operational efficiency, acquire a new line of business, take on a new skill, improve the balance sheet, enhance revenues, etc.; this is not an exhaustive list; there can be many more reasons that drive companies to either merger or acquire others. During their life cycle, different companies use mergers and acquisitions as tools for growth and improved performance.
Mergers and acquisitions impact employees profoundly. The commonly felt impacts on the workforce are:
- Job loss
- Disempowerment or empowerment
- Role reduction or role enhancement
- Financial impact
These impact employees psychologically and materially, so they must be prepared. The good part is that mergers and acquisitions often are long-drawn affairs, and the buzz within the company of an impending acquisition or merger often gets leaked. Some promoters manage to keep these confidential to a point. Still, given the nature of this activity, teams of specialists from business, corporate affairs, finance, and even human resource departments are required to be involved, and the word does leak out.
Cultural change is one major change that impacts everyone in the organization. This is often seen in cases where a merger and acquisition lead to a top leadership change. New workstyles, business processes, bosses, targets, and goals, and there are, in some cases, changes in the workplace that employees must adapt to.
For those whose roles and payouts are reduced or are laid off, posting resumes, going through multiple interviews, negotiating payouts, getting offers, and starting afresh are major worries.
The most challenging times are for those who are neither laid off nor have their roles enhanced but continue into the newly merged entity. They find the changed environment difficult to adapt to; erstwhile colleagues and teams have been redeployed elsewhere, new hierarchies emerge, and the painful process of adjusting begins. We often underestimate the psychological impact of these changes on employees but organizations who recognize these challenges and help the workforce adjust to new realities succeed in reaping the fruits of these corporate events. Those who ignore suffer the consequences. And believe me. Many belong to the latter category.
Post-merger integration can be a complex and challenging process. Still, by following a structured approach and maintaining clear communication, the newly combined company can successfully realize the benefits of the transaction. Before the transaction’s closing, the two merging companies should develop a detailed integration plan outlining the steps needed to combine the two companies.
Good communication is key to successful integration. The companies should develop a communications plan to keep employees, customers, and stakeholders informed about the transaction and the integration process. The two companies should work to create a common culture that reflects the best aspects of both organizations. This can include aligning values, mission, and goals. The companies should assess the newly combined organizational structure and determine the best way to allocate resources, responsibilities, and roles. The companies should integrate their systems, processes, and technology to ensure that the newly combined company operates as efficiently and effectively as possible.
The companies should assess and integrate their operations, including supply chain, manufacturing, and distribution. The companies should assess the combined workforce and develop a talent management strategy to retain key employees and ensure a smooth transition. Risk management should assess and manage potential risks associated with the integration, including cultural differences, operational disruptions, and regulatory issues.