Why Alignment Is Crucial for Successful M&As

Alignment is crucial to planning a successful merger and acquisition. Keeping alignment goals at the forefront of budgeting and planning starts with locating a target company to purchase and remains important as you integrate the two organizations and define how the end organization will operate.

Alignment Concerns Before the M&A

Before a merger, you should come up with an active checklist of what the target acquisition looks like, what gaps it fills in your current business model and the benefits to both organizations. Alignment focuses the search on target businesses that complement your organization and helps you avoid fixating on one company.

The leaders of the buying company must have a clear concept of how the two companies fit together, both operationally and organizationally. Take the time to develop an integration strategy that considers the synergistic opportunities of the merger.

Two Essential Questions to Facilitate Alignment

How can leaders align different business models? When undertaking an acquisition, discuss the following:

• How would a merger of the two companies combine capabilities that create distinct value?
• What capabilities of each organization can drive that value proposition?

Organizational design is a key component to consider. Determine which processes of each organization give you the biggest competitive advantage. Then, consider what work you can centralize to realize cost savings and efficiencies for the merged entities.

The integration plan should allow plenty of time to merge departments in the right sequence. Prioritize the preservation of differentiating capabilities over cost-savings, such as the consolidation of back-office cost centers. The most significant benefits evolve from the special skills or market expertise of either merger partner. When you find an organization with distinct advantages and skills that are transferable, put that company on your shortlist of strategic acquisitions.

Alignment Concerns During Integration

During the acquisition, alignment becomes even more important. A new brand will take shape that merges two cultures. The focus should be on people. Determine the number of people needed post-merger and communicate clearly and often about how and why decisions are being made. For example, your employees should find out from you that the merger is happening, not the media or the rumor mill. This includes the employees of both the acquiring and acquired businesses.

A shared culture starts with letting employees know how the changes impact the way they do their jobs. Confusion around process and uncertainty can cause a lot of defections during the merger. To keep key resources, communicate changes clearly and well in advance of when they take effect.

Where the two merging companies do business differently, carefully consider the efficacy of both processes and choose the one or combination that exploits the best aspects of both processes.

Successful M&A Demands Alignment

A deal that makes a lot of sense on paper is a good start. But it’s only a start. Organizations designed to get results have departments designed for specific purposes, avoiding duplication. Buying another company won’t automatically win the hearts and minds of the people working there, some of whom you desperately need. To achieve the benefits of the talent acquired in an acquisition, the two companies must merge int a single entity in practice as well as in theory. Both companies will have skill sets and practices that can make the new organization a dynamic, vibrant place to do business.