• Energizing the teams. Get the right employees and managers into the right jobs and enable them to be enthusiastic about their new roles and the combined company. Most companies use top-down culture surveys to support vision and values integration, and to flag systemic conditions that may cause problems. The best M&A practitioners go a step further and build detailed programs for organizational and cultural change that are tied to specific integration initiatives. They also recognize the power of the daily hallway chatter among employees. These back-channel communications provide an important avenue for building enthusiasm and excitement; they are also effective at defusing the kind of rumor and gossip that can paralyze a workforce.
• Stabilizing operations. Amid merger-related pressures, distractions, and conflicts, it’s easy for integration team members to lose sight of their primary responsibility: keeping both companies going until they become one, and ensuring the combined entity can operate. Especially during the first crucial weeks of a merger, planners need to detect problems before they grow intractable. (Are products getting placed on the shelves? Is the sales force covering all the stores?) In addition, each major transition — every product rationalization and accounting procedure change — needs its own stability plan and problem-resolution mechanisms. Issues such as delegation of authority, payroll, workload conflicts, and pricing must be resolved immediately, if only temporarily, for the organization to function. There might be a merger going on, but everybody still needs to know who his or her boss is.
Quest Diagnostics Inc. faced these challenges as it integrated a series of acquisitions from the late 1990s to the mid-2000s. Each deal involved assimilating a complex network of laboratories, physicians, and time-sensitive couriers in a business where customers would switch to competitors if the operation did not continue to function smoothly through all phases of the integration. The leaders of the company recognized the imperative and spent a great deal of time on the integration plan, conducting what-if scenarios, simulations, and trials before the final implementation.
• Closing the deal. The last mile of the merger-negotiation marathon is exhausting and fraught with minutiae, legalities, and tough and sometimes emotional decisions. A long, drawn-out process can sap the strength of employees, disrupt current operations, and, of course, delay management’s ability to deliver on its promise. For one U.S.-based merger, the integration team had to modify its layoff plans in one state because the seller’s CEO was being considered for a high-level political appointment. He worried that layoffs would jeopardize the appointment, because it had to be approved by a government committee headed by the affected state’s congressional representative.
• Identifying and managing “moments of truth.” Some big decisions that involve emotional or symbolic issues, such as choosing the location of a new headquarters, which factories to close, or a new corporate name, represent obvious “moments of truth”: events that visibly evoke the future direction of the new enterprise. Other events can be far more subtle but just as influential, in ways that only integration teams who understand the companies’ cultures can appreciate. In one merger, two companies with strong plant safety heritages came together. The smaller company had a policy banning mobile phone use while driving company vehicles (even when it was legal). The new firm adopted that policy, after an astute integration team alerted the acquiring company’s senior management to the signals their decision would send about the new company’s seriousness about safety, and the extent to which the deal was a merger versus an absorption.
• Creating a post-close transition plan. Transition plans prepare a company for action as a merged whole. They specify, for example, when day-to-day line management will take over operations from the dedicated integration teams. A premature return to “normal” operations can undermine success — but if the handoff is delayed too long, the line managers might not buy into the new plan.