Merging companies is more than just another financial transaction. It involves far more than combining finances and sorting out staffing issues. Making a merger work and building a strong team post-merger is hard work. The following tips might come in handy if your company is considering acquiring or merging with another company.

Effective communication is the key element to a successful merger. Communication should begin early in the process, too often it is initiated until it’s too late. Most mergers go through three distinct phases:

  • research
  • negotiation
  • integration

The phase that has the greatest risk of complete failure is the integration phase.

It seems that a great many studies support that people issues seem to be the main reasons for failures with mergers. This is solely due to communication problems, and could very easily be avoided. Effective communication to staff is the most important issue emerging in virtually all studies involving mergers.

No matter how brilliant the vision behind the merger might be, continued and sustained success depends on staff. Employees are the ones that will handle all the daily tasks of running a company, and have the biggest opportunity to sabotage the merger.

Early Communicate is Paramount

Indirect communication is often the way employees first hear about a merger or acquisition. It’s human nature to be curious and wish to discover what is going on. If employees suspect management is keeping them in the dark they may begin to feel anxious or slighted.

Uncertainty leads to speculation. Interpretation of various clues inevitably leads to paranoia, and the grapevine quickly circulates information that management may be conspiring against them. Instead of wasting time with pointless rumors, it’s best to confront the issue head on before important staff members hedge their bets and seek employment elsewhere. Companies need key staff members to successfully navigate a merger and maintain optimum operation after the merger is completed.

Change is the Only Constant

Mergers that combine staff with similar talents and skill sets might elicit anxiety and vying for dominance on either side. Employees may worry over job security and may have to confront the following:

  • Loss of status
  • Uncertainty regarding the future
  • Decreasing job security
  • Increased workloads due to staff departure

Keep Information Flowing

If newly assembled teams aren’t combined with communication in mind there will be more problems than necessary. Information flow from upper levels to lower levels must be maintained to quell uncertainty. If this isn’t competently achieved, the company grapevine will often fill the vacuum and eventually cause issues with the merger.

Post-merger communications are required in order to:

  • Ensure employees and the board share a common vision for the company
  • Assist employees with internalizing change
  • Maintain focus on customers and productivity levels
  • Retain and motivate key staff members
  • Contain any rumors

Be Mindful of the 4 C’s

Companies wishing to ensure that any merger and acquisition transactions proceed smoothly and don’t end in combustion should make sure that they remember the four C's to stay on target. Employees will appreciate the extra efforts from management to make sure current and future changes occur as smoothly as possible.

Compensation

Existing management will weather changes and achieve goals more effectively if they are well compensated.

Communication

Quell the rumors and eliminate paranoia by making sure everyone is informed of future changes. Uncertainty fuels frustration, avoid it at all costs.

Caring

Small inconveniences can cause big misunderstandings. Respond to the changes and discomforts quickly by maintaining open communication with affected staff.

Culling

Sometimes saying goodbye is necessary. If you must eliminate anyone, think things through, but make a decision quickly.