Mergers & Acquisitions: Day 1 - People
Introduction
Day 1 is when you take full responsibility for the acquired organisation.
In my previous article, I summarised the CIO’s Day 1 priorities in terms of People, Process, Technology and Data.
In this article, I expand on the first of these focus areas – People.
Context
There are two main sets of people affected by an acquisition: those being acquired as part of the deal and those already part of your existing organisation. In each case this includes temporary / permanent employees and resources working for critical partners.
All are likely to feel uncertainty about the future.
Your job is to provide structure for all those affected and as much clarity as you can. You need to share what you can about what happens next – and be open about what is undecided.
Most importantly, you need to live and breathe the culture and behaviours you espouse. People will listen to what you have to say – but believe what they see in operation.
Your work starts from the first point of engagement and runs throughout the deal process, during Day 1 activities and onward through integration and into business as usual.
Preparation
Due Diligence
During due diligence you gather high-level information about the people in scope of the acquisition and the skills they have. You use this to assess both gaps in capability and overlaps with capabilities in your current organisation.
Using your organisation’s strategy – particularly in terms of integration and business operation – and your Technology strategy as a basis, you assess the likely combined capability against your target ways of working and operating model.
As a priority, you identify
critical roles or capabilities you need to retain (and for how long)
where there is duplication (and when that would need to be addressed).
Your assessment will feed into the wider People strategy and plan for the organisation.
You may also get the chance to meet some of the leadership team – particularly if due diligence involves management presentations. This is an additional opportunity to assess capability and understand the risks and opportunities within the incoming Technology team.
Leading up to Day 1
Until Day 1, the two organisations remain legally separate entities, so you are limited in what you can do in terms of bringing your teams together and making decisions about people.
However, there will be increased engagement between the two organisations and the opportunity to develop rapport and good working relationships with (at a minimum) the leadership team being acquired (and, where appropriate, their key partners). By treating all affected parties with respect and being curious about the underpinning technology and how they operate as a team you start to build trust between you.
You can talk in general terms about your strategy – without making any commitments about integration plans - and can use this to develop a better understanding of each other’s target operating model.
You will also agree plans for immediate Technology changes – which I will talk about in a separate article.
This is also the time when your existing team are most likely to have become aware of the acquisition and want to know more about how it affects them. You will be able to talk about the context and what you know about the Technology being acquired and likely integration approaches. But you will not be able to make commitments about the future organisation structure.
How should you decide what you do say. A good rule of thumb is to share information that you would be comfortable with the target organisation retaining if the deal failed to complete.
Recognise that from this point onwards, people will be interpreting everything you say and how you say it, along with your body language and demeanour. The future is uncertain for them, so make sure that all aspects of your communication process reflect the messages you want to convey.
Day 1
You are now officially one organisation. But this is only the start of your journey together. Whilst what you do on that first day sets the tone, teams will really judge you on what you do next.
Communication
In preparation for Day 1, there will be an organisation-wide communications plan. This will include the content and the timing of communications you have agreed to brief both Technology teams.
Set piece announcements about the interim organisation structure and responsibilities (including any agreed changes) – and organisation-wide content – will be issued on Day 1.
Whilst formal corporate communications are essential, the real job is to establish a human connection and make the incoming team feel welcome and part of your organisation.
Nothing beats meeting face to face, so if you can, go to their site and meet them in person. If that is not possible or practical, make sure you arrange a virtual meeting / town hall so you can introduce yourselves to each other. Even if line management has changed on Day 1, show respect to the previous leadership team – and plan this meeting and communication in advance with them as much as possible. Look for ways to bring your leadership team along as well – to break down the barriers between the teams.
At the same time, you need to make sure your existing team is briefed and feels included in the process.
Both teams will want to ask you about what happens next and how they will be affected.
Make sure you have prepared answers to expected questions and that your answers have been agreed with your wider organisation, particularly HR / Communications and, of course, comply with local regulations (which may differ from country to country).
Tell them what you can. If possible, share your high-level approach to integration and what will be happening in the immediate term. Be as transparent as you can about how you will work together and when they can expect to know about any longer-term changes.
There will be some questions that you can’t answer, or you don’t know the answer to. That is fine – and there is nothing wrong with saying so. If you can, tell them when you will have an answer.
Retaining critical resources
In the lead up to Day 1, you will need to identify critical resources and have an agreed plan to secure them and / or their knowledge. You will also need to consider contingencies in case they choose to leave.
From Day 1, with the agreement of HR, you will need to implement these plans.
Teamwork and Planning
It is important to acknowledge that things will change. Describe your strategy and style and the culture of your team and wider organisation. Ask about theirs. Talk about how you can align as a team and work well together – even during uncertainty.
Be conscious that some colleagues may choose not to align with your culture and values. Make sure you tackle issues quickly, consistently and effectively. This applies just as much if it is critical resources who are undermining your leadership; you just have an additional task to address the potential loss of knowledge or skill.
You are one organisation so make sure you are being consistent in your dealings with and communications to both teams (the acquired team and your existing team).
Talk about how you want to work together, formally and informally.
Work out and agree which forums and meetings should
continue unchanged
stop or be replaced with other existing forums
expand to include both teams
be added
and who should attend each event.
Agree when and how in-flight projects and initiatives – from both organisations - will be reviewed.
Identify what individuals need to be doing in the short to medium term. This may be broadly what they were doing before the acquisition or there may be opportunities to get involved in the integration or other initiatives. Especially if the longer term is uncertain, identify and share opportunities for potentially affected colleagues that will enhance their career opportunities (whether or not they stay in the organisation).
Work together to improve and finalise the integration plan you have been developing through the acquisition process. Talk about the outcomes you are seeking to achieve and use their specific knowledge and expertise to improve the detail and reduce the risk.
Conclusion
There is a lot to do in any acquisition and for Technology teams, the heavy lifting often starts once the deal is done. You want everyone to give of their best for you to achieve your intended outcome. Building good rapport, teamwork and ways of working across the two organisations is key to success.
There may be some difficult conversations ahead, but where individuals feel they are being treated fairly, professionally and with respect, these can be managed effectively for all affected parties.
Communication is key to all stages of this process – what you say, how you say it and when you say it.