Thoughts on M&A Activity

Over the years, I've been witness to a number of different merger and acquisition scenarios with the companies/departments I've worked for. I'm sure a number of you have as well. Whether your company was sold, your department merged with another, or some other large transaction occurred...the fact is, you probably have witnessed the best and worst that business has to offer in these situations. Generally, there's almost always going to be situations where positions are eliminated, exciting new opportunities emerge, employees become disgruntled about new culture/people/products, and/or just a general feeling of anxiety sets in among most colleagues.

From my standpoint, it's obviously a necessary evil. As Alan Greenspan would probably say, it's creative destruction at its best. Survival of the fittest. Everyone who is in business is in business for one reason, and one reason only: return on investment. Most often, mergers and acquisitions occur because one company is trying to fill a void, gain market share, buy a company in distress, etc. The reasons are endless. M&A is the Nasdaq for macro business activity. Buyers and sellers coming together to trade competencies, products, and services. At the end of the day, it's what creates shareholder value and eventually return on investment.

So what have I learned thus far in my career? Well, I think I've seen enough real-world M&A activity occur in which I can make the following recommendations/observations:

If you are the acquirer:

1. Spend the necessary time to evaluate the talent, products, services, and organizational structure of the company your acquiring in order to unlock the scale and value of the company you're acquiring.
   
2. Hire from within (or outside talent) to be the "integration expert" to successfully plan/merge the companies/departments. Often times, the main focus is the consolidation of the business units and not enough energy is invested in making sure it's the right fit or that the post transaction activity is seamless.
3. Provide an outlet where all affected parties can provide input as to the concerns, suggestions, or expectations of the transaction. Your frontline associates are going to bear the brunt of the work, anxiety, etc. around the transaction...solicit their feedback throughout.
   

If you are the acquiree:

1. Ensure that the acquiring company has a long-term strategic/tactical plan in place to integrate businesses, cultures, departments, etc.
2. Ensure that the acquiring company will invest in internal/external consultant help pre/post transaction to execute a macro transaction at a micro level.
3. Ensure that the acquiring company values your management talent to make decisions and help with the transaction for a time period of no less than 2 years after the transaction occurs.
   

If you are an employee (either acquirer or acquiree):

1. Meet regularly with your current management to position yourself in the new organization. Don't get lost in the shuffle as many new opportunities will likely arise.
2. Understand the reason/value behind the transaction to help evangalize the event with other associates. Be a champion of the transaction with your colleagues and if you don't agree with it, express your concerns/recommendations on how to make it a success.
   
3. Ensure that there is focus and plan by both the acquirer and acquiree to execute a seamless integration
   

At the end of the day, these macro business decisions need to be thought through at the micro level. True M&A success only occurs when all affected parties provide input early, often, and throughout. I have been witness to a number of macro transaction of high $ amount that translated in very poor execution. Companies can save a lot of money and high caliber talent if a strategic and tactical plan is in place.

This feedback is a bit terse and high-level, but I hope that helps those of you in similar situations.