Business > Leading with company culture the only way to merger and acquisition success

Leading with company culture the only way to merger and acquisition success

M&A growth strategies promise a multitude of strategic opportunities; from rapid growth, eliminating competition, to access to new markets. In New Zealand M&A activity is at an all-time high, with a growing number of smaller businesses finding this is the most cost-effective way to scale.

Many businesses have embarked on acquisition strategies but Hamish McLachlan, CEO of professional services business OneHQ, warns that businesses need to drive these projects with people-lead strategies through company culture, or the results could not live up to expectations.

"If there is a misalignment between the two organisations’ cultures, the friction can inflict significant damage as teams conflicting behaviours often undermine any forecasted performance gains."

Businesses engaging in acquisition growth often do so with an external focus; will this help our business to compete? Will it help us gain market share? Once the deal is done the focus then moves to unlocking synergy benefits; one of migrating payroll systems, whose incentive programs are better and how do we integrate more effectively?

Having done a number of these projects in recent years, including the recent merger of Fission IT, NexGen and Cloud Accountants to fit under OneHQ, McLachlan says it's critical company culture be considered for success.

"With a larger number of people and greater service complexity, it is often harder to communicate than you think, both internally and externally - it must start with selling the concept to your internal team first. You must get your people to feel like they are part of the merged entity, they're heavily engaged in any changes, understand why the business is following a certain path, are supported with the right resources and empowered to make decisions. Open and honest communication goes a long way to getting everyone on the same page."

McLachlan says that using a 'best of both worlds' approach can help everyone feel included as well as prevent a drastic change for any party.

"When creating the OneHQ merger, we chose businesses that had similar cultures, particularly in their client engagement models. You still find though that organisations may define customer success differently and this can cause frustration as teams struggle to figure our what the new 'right' looks like. It is sometimes better to allow system and process changes to take a little longer, so everyone feels comfortable about what is expected of them under the new model."

McLachlan shares his approach when leading these businesses through the merger:

Communicate your reasoning and roadmap

You must get buy-in from employees and in order to get that you must communicate clear reasoning for things like why the acquisition is happening, why you chose that specific company and what the transition is going to look like.

Communicate often and with transparency

"It can take a while to grow into your vision, directions can change often as you learn and adapt. Leaders often don’t have all the answers, but you can keep team members engaged by ensuring there is good two-way communication."

Delve into the culture of each business

It’s not enough to just accept that the surface of the cultures seems the same, companies could have the same intention but the way they execute could be completely different.

Celebrate successes and failures:

Integrations are incredibly complex and there will be just as many failures along the way as there are successes.

“Communicating the failures can often be more important than the successes as it creates a positive culture in a business where its OK to fail and talk about it. And in doing this, team members can adopt a "fail fast approach".

Get rid of the silos

"Businesses can often have silos running within them, a merger can be a great way to disestablish these and create a more harmonious team."

Ensure managers are prepared and capable of coaching their teams

Executives need to prepare managers to coach their teams through the process, this should be driven through an empathetic approach, so people feel valued and connected in what the company is doing.

The key to success always comes down to your people. Getting everyone going in the same direction can be the difference between success and failure. Communicate often, listen and act on feedback and empower them to make decisions. Good culture requires everyone to be engaged, a merger is often a great opportunity to help them do that.

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