How To Win The Long Game With A Merger/AcquisitionNovember 25, 2020
A merger/acquisition is a marathon, not a sprint.
I’ve been involved in many mergers over the years. I’ve seen them flourish. I’ve seen them fail. One thing I’ve learned is that the real work with a merger begins after two businesses agree to do an M&A. In my recent Forbes Agency Council articles, I’ve discussed the many critical success factors you must get right to even launch a merger. Now let’s examine how to make the long game work when you undertake a merger/acquisition.
Build Capabilities That Leverage Your Values
I’ve stressed how important it is for your brand values to guide every decision you make about a merger. The values of your two companies must be aligned if your merger has any chance of succeeding (and keep in mind, many of them fail). At the one-year mark, you should be moving past the question of “are our values compatible?” and focusing on how your combined company can create a stronger offering for your clients.
When my company, Investis Digital, bought communications firm ZOG Digital, we leveraged our shared values, such as a commitment to innovation, to develop an approach we call “Connected Content.” This approach allows us to help clients craft brand stories that better reach their audiences through content creation. This approach was the payoff of building a stronger company together, and it guides our entire company today.
Build Your Brand From The Inside Out
You can’t slap a new logo or name on a business and say you have a new brand. Yes, visual identity and even a new name might be an outcome of your merged company, but they are manifestations of your brand, not the brand itself. You build your brand by first rallying your own people around your mission, vision and values. From there, you change behaviors.
A relationship with a brand is emotional, and that reality applies to your people, too. Once they begin to feel an emotional connection to your merged company, then they’ll start living your brand whether they’re talking about your company on their socials or proposing work to a potential client. You’ll know you’ve succeeded when you see people on the same page behind the scenes, when your client isn’t in the room with you.
Keep Your Eye On Performance
How do you know that your merger will succeed in the long run? The answer is easy: look at the numbers. Yes, I said your M&A needs to be rooted in values, but that doesn’t mean financial performance is less important. Actually, values should drive performance. If you’ve built a business off shared values, your combined entity should be cross-selling each other’s capabilities seamlessly. That’s because when newly merged businesses cross-sell to their clients, they’re making a vote of confidence in each other and they’re showing trust in each other. You cannot build that confidence and trust unless you have shared values.
Manage Your Merger Appetite
A word of caution: When you pull off a successful merger, it’s tempting to ask, “What’s our next deal in the pipeline?” It’s a funny thing about mergers: They can become like a fine wine or a gourmet dish. You develop a taste for them, and you want more. Make sure you keep mergers/acquisitions in perspective. They are a means to an end, not an end unto themselves. Always remember: Values come before mergers.
For more insight, check out my forthcoming book, The M&A Solution: A Values-Based Approach to Integrating Companies.