Challenges Every Leader Faces in M&A

By Moira Donoghue
Moira is a former Partner and Global Strategic Adviser in the M&A practice at Mercer, and Key Presenter at "The Art of People Leadership in M&A: Managing Talent, Culture & Change for Deal Success"

Despite years of evidence from research and the lessons of low-performing acquisitions, many still fail to capitalize on the richest resource available to an acquirer – its people.  Why does this still happen?

Over-focus on doing the deal and under-focus on making the deal work. 
There is no question that strategy, due diligence and negotiations are a tough job.  But they only lay the groundwork for a successful deal.  They create a plan for the new company – but the value of the deal comes in executing that plan.  And it is in the integration phase of a deal that most people issues need to be addressed.  Under-focusing on integration by not having an integration model that realizes the deal potential and under-resourcing the significant work required for a successful integration mean that these people issues do not get addressed well or in time to avoid problems.

People decisions are tough. 
Many executives and managers are reluctant to make decisions that impact people or they lack confidence in their ability to make good decisions, especially during significant change in a business.  Deferring these decisions becomes a path of least resistance. 

Leaders are busy. 
Executives and managers responsible for people decisions can have significant deal-related responsibilities, often in addition to their ongoing responsibilities.  The tough people decisions become easy to put off. 

Leaders get a head start. 
Leaders are almost always further along in understanding and accepting the changes brought by an acquisition.  They started earlier and resolved their “me” questions earlier.  Often, they don’t see that the uncertainty they resolved for themselves continues to exist in the broad employee population, affecting productivity and loyalty.

There is pressure for early financial results. 
This understandable focus on the bottom line distracts leaders from people issues. 

Leaders underestimate the nature and magnitude of change. 
Research and anecdotal evidence demonstrate that the views of leaders and employees about life in the organization often differ markedly.  Both groups see the change brought by an acquisition through their individual and very different lenses.  Leaders who rely on their own lenses will underestimate the nature and magnitude of both real and perceived change that employees are experiencing.

Leaders underestimate or fail to understand the specific needs of employees.
Because leaders rely on their own lenses, they can misperceive employees’ needs.  Even leaders who sincerely want to meet their employees’ needs may roll out well-meaning but off-target help, wasting time and resources and missing and delaying opportunities to stabilize the organization.

Leaders assume too much about employees’ ability to respond to new expectations.
Leaders often assume that employees will know what to do and will have the skills and knowledge to do it well.  Even employees who want to do well in the new environment may need clear direction, leadership and training.  Enthusiastic proclamations of an exciting new business strategy don’t tell the average employee how their job has changed and what they should do as a result. 

Advisors to leaders typically don’t focus on the “human element.”
These advisors, especially in the early phases of a deal, are primarily strategic, financial and operational and often lack expertise or interest in addressing human capital issues. 

Even leaders who appreciate the impact the human element has on deal success will encounter these challenges.  Understanding them is the first step to overcoming them and to building the right attention to people into the deal. 

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Learn more details about these concepts and many others at The Art of M&A for HR Leaders in Orlando this May. This unique workshop-style training program brings together experts from leading firms like Willis Towers Watson and M&A Partners, to share their real-world insights, best practices and lessons learned. Space is limited, so register today!

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