Cooperation

And You Expected Synergy? (374 words)

CooperationSeems like every time you pick up The Wall Street Journal, your own industry’s publications or your daily newspaper—there you see it. You read about another merger or acquisition. Why are they doing this you question? The usual answer is synergy. If you are looking at a possible merger or acquisition, decide early on your synergistic expectations.

Be clear on what you seek, resulting from your merger or acquisition. What end-results do you believe are possible? How do you intend to create the axiomatic equation of one plus one equals three? To help you improve your chances of successfully blending organizations, I have listed are several areas that you should explore.

  • Economies of scale for cost savings in procurement, management, manufacturing and distribution.
  • Do you want to encourage entrepreneurship, initiative and risk taking on a local, regional, national or global level? Do you want collaboration among the units? Or do you want a traditionally hierarchical organization?
  • How do you intend to create and deliver innovative value-added services?
  • Will you take a broad marketing approach or focus on markets requiring distinctive competencies?
  • How will you achieve continuous improvement?
  • Will your new size and strength encourage you to pursue additional strategic acquisitions?
  • What about staff considerations? How do you keep the employees that possess the intellectual knowledge and skills critical to success? Employees from both companies will be concerned about job security. Additional considerations will be to help surviving employees understand why they were selected to remain. Some of these surviving employees will have guilt issues to deal with. They could have issues with why certain employees were not kept on that they thought were doing a good job. Communication is important here as executive search headhunters firms could be contacting your remaining employees. If they do not have an understanding of their value, they could be seduced into a new position elsewhere; leaving the merged company empty handed in some areas.
  • What incentives and rewards will be put into place as motivation for retained employees?
  • Even the name of your new merged organization is important. This will identify your marketplace position and inform all of your new identify. Create your new early in the process.
Edrigsbee