Making the M in Merger as Real as the A in Acquisition

Cheryl offers: As practitioners of change leadership, our focus is not so much on the change management process itself as on what kind of leader is required to really create change that lasts. We love John P. Kotter’s book, The Heart of Change because it touches all aspects of change, including the need to get employees emotionally invested to create the energy needed to change. With the new “normal” of our economy, one thing I fear will not change is that as markets dictate consolidation, the percentage of Merger and Acquisition failures will remain constant. You see, acquisition happens. One company is bought by another. Seldom does a merger happen.  Oh, assets get combined, leadership is chosen and redundancies eliminated; and the real heart of change that makes M&A’s worth the price  paid is the MERGER of cultures. Most leaders pay more attention to the organization chart, press releases, and employment contracts than the real need to enroll employees in the changes. The fact is, about 70% of mergers and acquisitions fail.  Almost 100% of the failures can be traced to not asking everyone to pay equal attention to the M as well as the A. Communication is the leadership’s responsibility in times of change; it becomes their legacy.

Sara adds: I was with IBM when it acquired Lotus.  I coached a number of people on the Lotus development team and was struck by how victimized they felt.  The acquisition had occurred, but for them, there was no merger.  In the shadow of those memories, I  turned to Adam Kahane, author of Solving Tough Problems .  Kahane is known for his work in helping create unity in places like South Africa.  He states, “There are two ways to unstick a stuck problem.  The first is for one side to act unilaterally – to try imposing a solution by force or violence.”  That’s how I read the press release in mergers like IBM acquiring Lotus or Oracle acquiring Sun Microsystems.  Kahane goes on to add, “The second way to unstick a problem is for the actors to start to talk and listen in order to find a way forward together.”   My opinion?   Acquisitions are financial agreements to acquire assets; mergers require people to work with other people intentionally and creatively.

One thought on “Making the M in Merger as Real as the A in Acquisition

  1. Alex

    The problem here is that this merger will not create true shareholder value in the long run. Sure, a competitor is eliminated, but there is a reason why they existed in the first place, and that’s not going away. The hardware these companies produce aren’t yet a commodity, IT professionals weigh their purchasing decisions very carefully. There are pros and cons to each of these brands. So, the combined company has to either maintain both product lines in order to keep the benefits of each intact, or carefully merge the brands / product together into a new platform. If they do, it’s just a third brand with its own pros and cons…it just has no competition. How long will that last? Not long if IBM has their way. If both brands / product lines are maintained, where is the synergy? The value of this merger will only be felt for several years, and it’s doubtful they will be able to cover the cost of the deal along with the integration expenses in that time. This is simply a case of an acquisition made out of ego that will eventually erode shareholder value.


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