For an acquisition to be successful, and deliver the value that both sides had envisioned, a host of areas must be integrated as seamlessly as possible. Staffing consolidation may be the most intense facet of a merger, but it’s not the only challenging aspect. Each company is unique, and while companies may have similar values and corporate perspectives, there will always be differences in processes and operations, with variances in management styles, resource allocations, engagement strategies and procedural protocols.
In the late 1990s, I took the helm of a small security services company called Universal Protection Service and doubled its revenue in a few years. Today, the company, now known as Allied Universal, brings in revenues of more than $7.3 billion annually with more than 215,000 employees. (Today, in fact, we were ranked #3 on Inc.’s list of the fastest-growing billion-dollar companies.)
Taking the company to this level required a carefully articulated plan which did not come without growing pains. We spent a lot of time laying out strategy and figuring out how we were going to execute that strategy while determining what resources we’d need. When you’re growing organically, you want to keep up and promote from within or acquire great people to build your business. When we started acquisitions, we had to make sure we had the right playbook to integrate those acquisitions. When you bring a half a dozen people into your company, it’s easy to teach them your culture. When you bring in thousands of people, it becomes much more difficult.
When we completed larger acquisitions, it wasn’t just a matter of processes that needed to be integrated. Even more important was integrating the culture of the companies with Allied Universal. We’ve now done this with 65 acquisitions, and have learned lessons around the driving principles for successful integration:
1. Senior team collaboration. A merger of large competitors involves the leadership of both companies, with the risk of a power struggle. This can present a hurdle to change management—both leadership teams in a merger fighting for supremacy when deciding key issues like the new company name, leadership titles, or where the company should be headquartered. Collaboration between the two leaders is absolutely key.
2. Clear outline of company operations. When acquiring a new company, it is critical to outline each function of the two companies’ operations, and compare the similarities and differences. From there, it can be determined the best way to design each function for the new company. In some cases, you may choose one company’s process over the other’s; in other instances, you may take attributes from both to create a new one. In a few situations, it may be decided that a newly created process is best. For example, following an acquisition, we ended up implementing new employee recognition and evaluation programs.
3. Assess all talent. It is vital to consider how each person’s talents and experience—from both companies—can offer the larger combined entity. A comprehensive, holistic evaluation of all employees should be made before decisions are implemented. Financial metrics should never be the primary avenue used to determine what talent is best for the new enterprise.
4. Clarify culture. The real key to a successful acquisition is to communicate clearly and often. Clarify roles, benefits and compensation for employees, and let them know what they can expect from your leadership style and culture. Employees from the acquired company are less likely to run for the exits if they are comprehensively educated about what their new role will be and the type of working environment they’ll be in.
Despite all their difficult passages, mergers and acquisitions are the norm in many business sectors. It is a simple economic reality that they enable companies to grow exponentially, and expand in areas and markets that previously may have been out of reach.
Perhaps the final lesson learned is that integrating organizations and aligning cultures always requires an all-in collaborative approach. Not only the leadership team, but employees, customers and constituents—all those whose depend on the company—must be in it together to achieve success.