After merger-candidate selection, due diligence and regulatory conformance are completed, the bankers and lawyers have gone — the merger or acquisition is a finally a done deal. Now the new management team must make it all work — the nuts-and-bolts merger decisions per se must minimize the downside risks and maximize the investment value — both the stakes and the risks are high.

Based on most standard metrics, mergers and acquisitions have only a one-in-eight success rate. The executive team must rapidly transition to a single organizational structure while producing results justifying the costs, satisfying the shareholders and keeping customers loyal. When done with little sensitivity to the differing real strengths, assets and liabilities which exist among the blended organizations, a failed merger is a potential result.

Amalgamation of corporate cultures is fraught with problems. The dominant company must consider the staff and processes of the other company. The strengths of each organization, especially those cited as part of the merger justification, should be nurtured and the weaknesses on both sides weeded out. Unfamiliar aspects of one organization not understood by the other, ignored during the merger process, can potentially reduce shareholder value or cause the newly-merged company to fail.

Mergers fail because of poor communications and transitioning delays to the new organizational structure. These give employees, analysts, stakeholders, customers, and your competition the opportunity to feed the rumor mill, with its consequent negative impact. In addition, an unrealistic transition plan results in a stalled process where nothing is accomplished, especially those things affecting long-term viability.

High-tech mergers can also fail because of a poor fit of technologies, mismanagement of human factors, forced key staff relocation, disparate salaries and benefits, and cavalier HR decisions.

HEI's consulting staff have participated in mergers — the largest involving more than $1B of annualized cash flow, in excess of $1B in capital assets and some 8000 staff. We can help you beat the odds, to help your organization's next M&A to be as successful as possible.

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