Mergers and acquisitions (M&A) are complex business transactions that hold the potential for significant growth and transformation. However, not all M&A deals reach a successful conclusion.
When it comes to failed M&A deals, the standard explanation often points to integration as the primary problem. However, a closer look reveals that integration is not the sole challenge, especially for companies buying complementary businesses they are familiar with.
Going beyond integration
Integration in M&A means joining two companies to work as one efficient team. While it might seem like a perfect match when acquiring a business that operates within a familiar industry, success isn’t guaranteed.
Integrating helps cut costs and boost productivity, but it is not just about merging smoothly. The real test is whether customers see the benefits of the new setup. They need a good reason to welcome the change, and that involves more than just blending systems and processes.
The challenge of change
Embracing change is critical to achieving post-M&A success, especially when considering customer needs. This challenge revolves around the need to change various aspects of the newly formed entity to align with its overarching goals and objectives. It often involves several key facets:
- Rebranding: Sometimes, businesses need to think about giving their logos or company names a new visual identity. They might want to update their overall appearance to show customers and stakeholders a unified image.
- Product offerings: They might also consider consolidating similar products or services together. If not, they can bring in new ones or phase out the old ones to match what their customers want as the business changes.
- Cultural integration: They should also make sure everyone feels like they are part of the same team by building a shared corporate culture. Team activities and leadership training usually help create a friendlier work environment where everyone can work harmoniously.
- Customer service: Good customer service is always at the heart of every change. Businesses must put together customer support systems and teach them how to deal with questions about the merger. It is worth setting up clear ways for customers to get help quickly.
Balancing integration with the need for change can be delicate. While keeping what customers value from each entity is crucial, companies must also be willing to adapt and evolve to meet evolving customer expectations and market dynamics.
