image 6 Best Ways to Improve the Success Rate of Mergers and Acquisitions

6 Best Ways to Improve the Success Rate of Mergers and Acquisitions

What if a little strategic planning now could help your company beat all the odds? 

During mergers and acquisitions, it’s normal for everyone involved to be anxious. The average worker is concerned because they worry about redundancies eliminating their positions. Executives typically worry over something else, though — the chances of failure. And those chances are quite high, with acquisitions alone having a failure rate as high as 90%

Mergers and acquisitions success stories may not be the standard, but they illustrate the importance of getting the process right for both companies involved. How, then, can you improve the success rate of your upcoming merger or acquisition? Keep reading to discover the answers! 

1. The Importance of Due Diligence 

Perhaps the single best thing you can do to improve your M&A success rate starts very early: due diligence. This has always been the most important part of the process, of course, but recent technological advances have allowed companies to go deeper with this than they ever have before. 

For example, due diligence has always been an expensive and time-consuming endeavor. In recent years, advancements in analytics and “big data” have made it easier to save time and money by properly leveraging technology. Done right, this lets you have your cake and eat it, too — your due diligence will be more thorough than ever before while saving money and time. 

2. Integration Planning: Start Now, Not Later 

Want to hear the biggest “rookie mistake” in the M&A process? Here it is: Time and time again, executives tell themselves that because they have so much currently on their plate, they will worry about integration planning once the M&A process is complete. 

Quite frankly, waiting too long to plan integration properly will almost certainly destroy your chances of success. Instead, you need to begin integration planning as soon as possible. Planning for things like financial, operational, technological, and organizational alignment from the beginning will improve your odds of success. And it will also help you with the hardest part of the M&A process: cultural alignment

3. Understanding the Culture 

The reason that cultural alignment during mergers and acquisitions is so difficult is quite simple: Except for decision makers, everyone else is worried about their place in the new company when the dust clears. Because of this, workers from the two companies involved will develop an adversarial “us vs. them” mentality at a time when collaboration and teamwork are most important. 

Much of this comes down to the language you use when interacting with workers, especially when discussing the M&A process. For example, instead of saying things like “my team” or “my company,” encourage employees to begin saying things like “our team” and “our company.” This helps underscore how the entire process is a group effort. You can improve the odds of a successful merger or acquisition even further by investing in key players on both sides. 

Two businessmen pushing together matching puzzle pieces

4. Identify and Invest In Key Players Early On 

A major difficulty with the aforementioned “us vs. them” mentality is that executives, managers, and other leaders are typically perceived as outsiders who will change things for the worse. Since successful M&A hinges on workers accepting new leadership, it’s important that you identify and invest in key players in both companies as soon as possible. 

These key players aren’t necessarily managers. Instead, they will likely be charismatic and easygoing employees who have helped create and maintain the workplace culture. By working with workers with this kind of high culture quotient early in the process, you can turn them into trusted allies. In turn, because other workers trust these charismatic individuals, they will become de facto brand ambassadors, both of you and the M&A process. 

5. Effective Communication With Affected Workers 

Effective communication from leadership is vitally important during mergers and acquisitions. However, defining effective communication is quite difficult, especially because you may not have definitive answers for frightened employees. 

What, then, are the secrets to effective communication? First, transparency is key — even when it’s bad news, you need to let workers know important info in a timely manner. Second, fairness matters. It’s important to address everyone’s concerns equally and avoid any signs of favoritism, especially if it involves favoring one team or company over another. Third, you should emphasize that your door is always open. You might not always have the right answers, but simply letting employees know they can always pose questions can help make your next M&A successful. 

6. Make Strategic Concessions 

Remember that “us vs. them” mentality we were talking about? That’s not necessarily limited to workers who are worried about losing their jobs due to redundancies. It may also apply to executives in each company who are responsible for ensuring M&A success. 

It’s easy to go in guns blazing with the mentality that you’ll fight for whatever you want and never give an inch. The truth is that every single successful merger or acquisition depends on each side’s willingness to make strategic concessions. Things like contingent successions help keep things fair, and showing your willingness to concede will likely evoke a similar response. Through such compromise, you can achieve mergers and acquisitions success. 

Make Your Next M&A a Major Success 

Now you know the best ways to improve the success rate of mergers and acquisitions. But do you know who can make your next M&A smoother and more successful than you ever imagined? 

Here at Confie, we specialize in successful mergers and acquisitions. Ready to see what we can do for you? To discover what we can do for you and your company, feel free to reach out online or just give us a call at 714-252-2500