You Said WHAT??

So last time we were looking at a target company that was in the middle of announcing to its staff that it had agreed to be sold (All Quiet on the Working Front). The Merger Verger was lucky enough to have “fly on the wall” privileges for two conference calls that were part of the internal announcement process. We continue our previous commentary with one more Simple observation.

The second call was focused on the target’s sales team, giving insight into the acquirer and food for dealing with potential customer concerns about the transfer of ownership. Again, all mostly Acquisition Integration 101 stuff. But as the call neared its end, one of the participants asked, “what are we not supposed to tell our customers?”Robert Osborn cartoon

OMG … what a fantastic question!! And all too often overlooked (as it was in this case).

It’s not The Merger Verger’s intention to list the million and one possible issues for non-disclosure (or even just one, for that matter), but we do point out that guiding staff – particularly those who are to be ambassadors of change to such outside stakeholders as customers or suppliers – about what they should not discuss is just as important as guiding them on what they should say. A simple “that information is not being disclosed [for competitive reasons, or whatever]” is usually enough to do the trick without sounding evasive or unhelpful. If, for some reason, that is not enough for the stakeholder, make sure your team knows what it is permitted to say and – also Keep Mumimportant – where the concerned party can go either for more help or for a more senior (and therefore presumably more satisfactory) explanation of the non-disclosure.

So when you are developing your core FAQs to prepare insiders for their conversations with outsiders, make sure you pause to include potential questions that they should not be answering and what they should be saying or doing instead.

Simple enough. But don’t be so focused on perfecting your outgoing messages that you overlook it.

Happy Harry

About the Art: It’s all 1940s.  Top: a US Navy propaganda cartoon by artist/satirist Robert Osborn encouraging civilians to keep their mouths shut.  Middle: a British equivalent by artist Gerald Lacoste (1942). Bottom: the very definition of “better to say nothing.” Harry S. Truman holds up the morning edition of the Chicago Daily Tribune announcing – erroneously – that he had been beaten by Thomas Dewey in the race for president. November 3, 1948.

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Gunslinger Wisdom

What does a gunslinger/cowhand know about acquisition integration? At least one useful thing in the Merger Verger’s view. The following quote comes from the kids/adult classic western novel Shane by Jack Schaefer:

Don’t let things being quiet fool you. When there’s noise, you know where to look and what’s happening. When things are quiet, you’ve got to be most careful.Shane

That’s a subtle concept in acquisition integration and one that trips up a lot of folks. “Quiet” may mean that troubles are over but – as Shane himself suggests – it may also mean that touchy issues are festering in silence.

Your choices are basically two:

  1. Praise the God of your understanding for a smooth and now-finished integration process; or
  2. Dig deeper and find out what is really going on.

For more thoughts on this important but oft-misunderstood topic in an earlier posting, Click here.Album cover: Shane sountrack

About the Art: Shane was first published in book form 1949.  Cover illustration from the original Dell paperback edition (top) and album cover from the soundtrack of the 1953 Paramount movie (bottom).

Processes and People at Heineken

Video

A Thanksgiving lagniappe: a very good, very short video on merging differing processes and cultures at Heineken NV.  What Heineken shows is that differing cultures can be made to enhance one another; it just takes awareness and focus.

Check it out by clicking here, courtesy of McKinsey & Co.

Thanks for alerting The Merger Verger to this video go to Riomar Capital.Thanksgiving_1861

About the art: Sketch by Alfred Waud of Thanksgiving, November 1861, in camp (of General Louis Blenker) during the U.S. Civil War. Collection of the Library of Congress

Leadership Counts

A lot of acquisition integration guidance focuses on the people handling the day-to-day grunt work of managing a deal’s integration. But it should come as no surprise that corporate leadership on both sides of the deal plays a large role also. Consultant J. Keith Dunbar has written a short but interesting piece for the September issue of Harvard Business Review that quantifies this effect.

Dr. Dunbar concludes that there are key attributes in a leader that can be predictors of deal success. Jaume PlensaThey differ as between the leadership of the acquirer and the target but not by much. For example, leaders from both sides of the more successful transactions were found to be strong on motivating others, influencing others, and building relationships. Other strengths on the side of the acquiring leadership were the ability to develop others, act with integrity, show adaptability and focus on customer needs.

Let’s pause on these attributes for a moment. What can we learn if we look at Dr. Dunbar’s conclusions from 35,000 feet? The MergerVerger has some thoughts:

The likelihood of deal success increases when acquirer leadership takes an active role. Why? One would hope that leadership is able to keep out of the daily muck of deal administration and make sure that the integration team is keeping their eye on the strategic objectives of the deal. Lose sight of those in the morass of daily details and your team’s way can get lost very quickly. So the skills of motivating others and focusing on customer needs make a key contribution here.

It is also clear that the visibility of acquirer leadership and his or her power to communicate objectives and other deal factors to the newly combined staff is vital. You cannot influence and develop others without these skills and without putting them to priority use often.

And we can see that deals work better when leaders give their subordinates something to look up to. Why else would integrity or adaptability matter? Particularly in the kind of turbulence that an acquisition represents, giving your staff the belief that their company’s leadership will act rightly in the face of new and changing circumstances will help you keep your best people and will motivate your team at large.

That all sounds like a formula for success.

Read Dr. Dunbar’s full HBR article by clicking here.

Today’s artwork is Irma-Maria (2010), a pair of sculptures by Jaume Plensa exhibited in 2011 at the Yorkshire Sculpture Park in Yorkshire, England. You can see more on Plensa, a Catalan artist, here or the sculpture garden here.

False Peace

When in an integration process does the cessation of griping mean not that the storm is over but that the hostilities have gone underground, that the people with issues have given up trying to get a resolution?

When is the quiet disquieting?

As a kid growing up on the Jersey Shore, The Merger Verger remembers distinctly his first experience with the eye of a hurricane. Have you Hurricane Sandyever been in one? After howling winds and blowing debris and trees bent sideways, the silence is absolutely enveloping. Utter calm … with no indication of the second round of pandemonium yet to come.

So what happens when a stakeholder’s complaints go unaddressed for so long that he just gives up asking for the desired change? And is there a moment before an employee or a customer walks that she can still be rescued if you don’t mistake the sounds of silence?

Somewhere in your integration process you will experience a time of false peace. Don’t fall for it. You’re in the eye of the storm and all hell could break lose if you don’t keep vigilant and focused. When the first waves of calm come, before you breath a sigh of relief, ask yourself one question:

“What could be going quietly wrong?”

Nine Points to Consider; Ten Really

Here’s a good, quick summary of issues to remember when doing an acquisition: Post-Acquisition Integration: Points to Consider.  It’s from a small-business website out of the UK.

The only comment that The Merger Verger would add is to remember that “post-merger integration” does not start post-merger. Very important.  See various postings on process and timing herein by exploring the tag “Timing.” And for CXOs, reread here, particularly attending to point #5.

Alternative: if nine points make your brain want to explode, try Five Points, also out of the UK.The Five Points Brewing Co.And if you can’t get to Hackney, you can pint pine here.

Transition During Transaction

When making a large acquisition the CEO, CFO and integration team leader (and one or more related divisional heads) should make a firm commitment to see the integration process through. If you are part of the decision to take the risk, you owe it to the organization to stick around and make the return.

Escher Sky and Water IThat means:

  1. Making a commitment (either as a personal ethic or a stated intention) of at least one year post-closing; and
  2. Living by that commitment despite other opportunities that might arise.

Whose job is it to ensure that these commitments are made? The CEO, plain and simple.

The Merger Verger Recommends:

As the transaction team is closing in on making a formal bid for a transformational acquisition, the CEO should call together the appropriate parties and say something like this:

We are about to make an investment that could open great new doors for our company but will also expose it to great new risk. Success will require the dedication, focus and time of this team in particular. For that reason, I am making a pledge to you and to the company that I will not seek or accept other opportunities that might come my way for at least one year following closing. I ask each of you to do the same. If we can’t make that pledge than we need to rethink our intentions for this deal.

Look, the Merger Verger understands that there is no loyalty any more and even that “shit happens.” But at the outset of a deal that has the potential to create or destroy enormous amounts of shareholder value, double-checking that there is an emotional (if not legal) commitment to standing by the risk should be a cornerstone of any “GO” decision.Cornerstone Setting
About the Art

  • Top: Sky and Water I by M.C. Escher, woodcut, 1938 (17.25″ x 17.25″)
  • Bottom: Laying the cornerstone of the main Boston Public Library building in Copley Square, Charles Follen McKim architect, 1895

The Destructive Power of the Individual – Part 2

A previous posting looked at the issues that can arise when acquiring a company with a long-time owner/founder or (even worse) an owner given to self-love … what the shrinks call a “narcissist.”  Today is follow-up: some cautionary approaches to dealing with them because (ah, life) they are way too prevalent to ignore.

Long-time owners can bubble with positive pride about their companies but their management techniques can make it extremely hard to tweeze apart what they themselves have accomplished versus what the company has accomplished.  Particularly if the seller/owner is retiring to Madagascar, this lack of clarity can become a big issue.

And narcissists can be enormously charming individuals.  That can make spotting one aVenus at her Mirror (detail)

real challenge.  The Merger Verger is no shrink so I will turn you over to others smarting than me for more details on diagnosing or identifying them (see links below).

What I will do here is offer some suggestions and words of caution on dealing with them.

Continue reading

Bare Bones

K-Y_Yours_MineThis should be an interesting transaction to watch: Reckitt Benckiser buys J&J’s K-Y “personal lubricants” business but takes no assets and no employees.  With no people and no hardware, integration should be a breeze. Verdad?

Anyone been involved in similarly structured deals?  How did the process go?  Are there unique integration difficulties associated with this approach? Share!

Image

Uniting with Customers Online

The Merger Verger recently had a very interesting discussion with the folks at the new United Airlines about the use of their website as a tool for connecting with customers during a merger.  While most of our focus here at The Merger Verger  is on companies much smaller than United, there were some very interesting take-aways from their experience.

  • Following the legal merger in late 2010, the company created three new websites, one for all customers (who might have questions about how the merger would affect them, their travel plans, their frequent flier status and a host of other issues and questions), a second for members of the old United frequent flier program, and a third for members of the old Continental frequent flier program.
  • UnitedHub.com, the broad site, included many elements aimed at smoothing the integration turbulence for the consumer: overview of the company and operational changes, an explanation of the impact on customer loyalty programs, a timeline of the integration, FAQs, videos explaining everything from the CEO’s vision of the new company, to how to navigate the new United website to what to expect from the new fleet of 787 aircraft.  Customers could post questions or comments, traverse an integration timeline and make connections with other customers via social media links.  It is a VERY through tool for making sure that the turbulent process of merging incredibly complicated companies was both transparent and comforting to its customers. (Clicking on the illustration will open a much larger, more readable version.)
  • Hub was set up explicitly to enable customers to ask questions and get answers about the merger.  All of the usual corporate-site stuff – from online reservations options to investor relations information – is absent from the Hub site.  It is just for customers and just about the merger.

Now, smaller companies may not need this level of standalone online communications with their customers but the concepts of individual attention to the worries of the customer – particularly in a consumer-facing company – are very instructive indeed.

  • According to my contact at United, an essential element of the communication strategy was to “give information to customers at the point when they are most clearly paying attention.”  Doing so maximizes the information’s impact and reduces the likelihood that frequent, expensive or frustrating repetition will be required.
  • “Customers pay attention at different times.” The key has been to analyze and understand when they are most likely to pay attention and target information delivery around that timing and through the channels that they are most likely to consume.

IMPORTANT NOTE: YOU CANNOT SATISFY ALL OF THE PEOPLE ALL OF THE TIME. 

On any given TwitterDay you can find complaints about the new United website and the new United reservations system.  Ditto for specialty social media like Flyer Talk and Mile Point.  United told me that they monitor these sites for customer insights and trends.  But they accept – as we all need to – that there will be some degree of dissatisfaction with the changes … always.  The point is to minimize the dissatisfaction, not aspire to eliminate it.

  • Lessons:
    1. Understand what the customer cares about and WHEN he or she wants (or is most likely to focus on) the information.
    2. Use small bites, not trite “sound bites” but digestible packages of thematically consistent and focused information.
    3. Do not use industry jargon when dealing with consumers; they don’t care and will turn off.
    4. Create opportunities for information flows TO you.  This requires what your mother called “listening.”  Bonus: not only does listening provide you with potentially useful information but it makes the customer feel respected and engaged.  Listening is a two-fer.  (Click here for previous posting on the art of listening, from McKinsey & Co.)

I welcome others’ comments on how they have used their websites to affect a smoother integration process.  Thanks.