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In a way, a merger is like a marriage. It's a union of separate beings contributing to a common goal. After the honeymoon, they will face new challenges but the successful ones will continue for many years.
So why are some mergers more like bad marriages? Maybe they forgot that successful unions take some time and definitely take more work. Below is a checklist to ensure successful reorganization after a merger.
What's the Problem?
According to a survey of about 2,000 companies, only 16% of merger reorganizations reach their objectives in time. About 41% take longer than expected, and 10% actually hurt the business. Common pitfalls include a lack of cultural understanding, poor integration of leadership, and setting the wrong targets.
To address these problems, authors for the Harvard Business Review suggest five steps for reorganizing after a merger and claim that companies using the process are three times more likely to achieve success.
1. Create a Profit and Loss Statement
Businesses call it a profit and loss statement; a family calls it a budget. Plan to spend according to the budget and stick to it. You can profit from losses, too, at least in theory. It's the American way; just look at the budget deficit.
2. Appreciate Current Weaknesses and Strengths
It's easy to point out your partner's weaknesses but not so easy to recognize your own. Focus on tasks that capitalize on the strengths, and eliminate as many weaknesses as possible early on. As the folk wisdom for a successful relationship says, go into a marriage with your eyes wide open and afterwards with them half shut.
3. Consider Multiple Options for Dynamic Organizational Solutions
No one should make all the decisions. Two heads are better than one. There is no "I" in team. All for one, and one for all. To be clear, the Harvard writers say: "In an M&A situation, the two merging companies will present two different ways of organizing, so these, plus a combination of the best of both, provide three obvious options."
4. Getting the Plumbing and Wiring Right
Those are the Harvard Review's words, not mine. What they mean, I think, is that business executives need to make sure the right people are doing the right jobs. Avoid forcing people into roles where they won't thrive.
5. Course Correct as Needed
After the honeymoon is over, make sure you have meaningful anniversaries -- not just flowers and a dinner. If you want to make it to the golden years, make the necessary changes along the way. To understand where changes are needed, you should complete a formal assessment early on -- after the first or second cycle of financial reporting.