Over the past few months I’ve been on the outside, looking in, on a rushed technology M&A process where it seems like everything is going wrong. It worries me when things like this happen, mostly because it leaves both the Acquisition and the Acquirer with bad feelings, but more importantly it generally leaves a demoralized, unmotivated workforce that at best is playing wait-and-see with the Acquirer and at worst is ready to jump ship as soon as they find something. As I have been on both sides of the process and have had my most recent opportunity to observe from a medium distance I would like to offer some observations to the Acquirers of the future.
First and foremost, when you make the general announcement, banish the words “nothing will change” from your vocabulary. Even if you add caveats like “immediately” or “in the foreseeable future” or “in the next three months” you are already wrong. Lots of things change out of necessity, but some basics that need answering: is everyone being paid on the same cycle? How is my last paycheck getting paid out? Do the benefits carry over? What do review cycles look like? What are the retirement matching benefits like? What is my new reporting structure?
These are just top-of-the-brain questions, but there’s proof that there are huge and immediate changes. It’s even worse when the acquirer is unprepared to answer these questions. I was finding it darkly comic to know that during an M&A, the Acquirer and Acquisition had the exact same retirement benefits manager, using the same percentage matching scale, with the same default fund selection, but instead of making it easy to roll over the benefits, the provider was required to issue a paper check that the beneficiary would have to sign and release back over to the provider to deposit to the new account.
Second, make sure there is a plan, that the HR resources supporting the M&A are drilled on it, and that the knowledge of how people will land in the new organization is both well thought out and well disseminated. Do not carry over people that will get axed in 90 days without warning them that their jobs may be redundant; treat them as human beings that need to provide for themselves and possibly their families. Certainly do this with a modicum of decor.
If morale is low immediately during and following the M&A process, imagine what it would be like if your HR person calls a manager, senior manager, or junior executive in to a huddle room or the HR office and tells them, a week or two after the merger is complete that they need to justify their job and identify where it fits in the new org because the job they have is redundant. And, oh yeah, that person’s entire team needs to do the same thing because otherwise they will not have employment with the Acquirer in the long term. Think about what that says when two weeks prior everyone was told “nothing will change in the next few months.”
If this were me, I’d be looking at an employment lawyer for assistance right away, and I may have suggested that for the person that it happened to as well.
Third, do your research. If the M&A is onboarding a technology stack that is new, but has similarities to one already in play (driving the M&A), do not assume that solutions for one will be the same for the other. If tools were discarded, understand why rather than just ignoring the decisions made. Work on integration - not just stomping on one side or the other backed solely by the phrase “we do it this way.”
It is completely possible that the solution might work for both parties, but without taking the time to understand the decision process and the ultimate outcome, it is both reckless and demoralizing for the party whose decisions and possibly expertise get thrown out the window. The expectation that all technology solutions are “one-size-fits-all” is a ridiculous one and the main driver behind such a varied landscape when it comes to technology - one solution does not fit every situation and the expectation that it will could be a very costly mistake.
Finally, be understanding. Rapid upheaval and change is a stress-maker, and stress increases health issues, reduces productivity, and can greatly impact communication even among strong, closely knit teams. When those teams are in lock-step driving towards some sort of goal, any one of the problems stated previously, and even more that I have not touched on, can drive an entire organization to disaster as that stress multiplies due to those bonds.
I have no doubt that the road to fast-paced M&As with abbreviated discovery periods are often well intentioned, but I also think many people know what roads are paved with good intentions, and why they should not be taken. It is not positive or profitable to end up with a new division, new employees, or new products where the people responsible are highly stressed at best and resentful at worst.