of mergers and acquisitions

In the corporate circles "Consolidation" implies the mergers or acquisition of one or many small companies into much larger ones. In other not so good to read words, the small rats agrees to be eaten by the big cat to the advantage of both the rat and the Cat at least, theoretically. Consolidation presents different perspectives, challenges and implications depending upon things like how big is the Cat/Rat (compared for numbers like turnover, employee count and all those financial number/ratios), is it a process driven industry like manufacturing or chemical or if it’s a people driven like information technology (IT), privately owned or public listed company.

Living successfully through the consolidation process triggered by a merger or acquisition is not only important for the cat but also for the rat, especially if the cat is not interested into eating the rat too soon. Expected outcome for the cat is to be able to get a fair return on the investment and the consolidation should be presented and viewed by the shareholders as worth while and successful. In recent times, so much has the Consolidation been happening in IT and ITES spectrum that it has developed itself as a growth model associated with a an inorganic quick growth mode. All the companies like Microsoft, Google, SAP, Oracle they all have been acquiring these small/mid-sized successful rats and adding them to there offerings – and who can forget the famous rats – PeopleSoft, Siebel, Compaq, i2 – so many of them. Some acquired to butcher and kill the competition, others to add a new feather to the CAT hat. If you can’t beat then – merge or acquire them. So much so that the companies could boast something like acquiring 11 companies in 10 years trying to sell a new acquisition deal one to the stock holders. From the looks of it everyone is up for grabs haven’t we heard the rumors floating around last week of Microsoft buying SAP and the Yahoo! negotiations are a reality for sure.

There are few things common to all the mergers and acquisitions – the announcement leads to chaos, confusion and a flow of a lot of negative energy into the organizations especially in the company being acquired. The process takes about 4-6 months and these are most difficult for the employees – emotionally. The question is what causes this and what could be done to avoid the short term immediate mental pressure for the employees of the company being acquired or merged.

Being through the four mergers and acquisitions in the last four years ironically all the time on the Rat side of it, the way the companies have handled it – there is scope for as much to be done that what all has been done. Usually, it starts with the announcement/press release. This is perhaps one of the most professionally managed and well orchestrated part – the information is crisp and happy for the stock holders of the cat company. The moment this information is published the panic strikes. This is usual and expected; employees are concerned with what will be happening to them – and then the CEO of the new company would send an Email -

"WELCOME TO THE NEW WORLD"

A lot after this depends upon what’s the motive and intention of the Cat – she wants to kill the rat and stop the competition for good or she wants to have a rat to integrate with itself. First one doesn’t require much to be done or to be managed – just fire and trigger the layoffs in one two or three, wait for few years after delaying the new releases of products or replace them and then, finally announce that after some years the support would be fully withdrawn. Poor customers of the company would take it like there bad luck and here, ends the story. There are few variants of the story but that’s where all of them end.

The problem magnifies if the objective is to retain the company and the employees and try to integrate them into the mainstream after rationalization and realignment. Remember, we are talking about an industry where the biggest investment and asset of the company is either it’s intellectual property or the employees- this is the knowledge industry. Numerous meetings and discussions would be held discussing that we must focus on our deliverables, keep this merger thing out of our head and wait for information to come – there is no need to panic blah blah. These meetings have just the opposite effect – they bring these discussions into main stream and make the message even stronger – something wrong could happen. It’s almost like shifting focus from the glass half full to half empty.

When everyone is so certain that there is nothing going to happen – why doesn’t it come from the CEO's mouth and if they are not so certain why they want to convey the message. Would it change a lot if we all thought that our words were a measure of our commitment? The first things that should come out of the talk should be a fixed time frame – I guess that would comfort people and pull them out of the immediate panic. We all know human beings are much better at taking decisions out of panic and pressure situations. Wouldn’t it be a good idea to avoid and cut this panic situation by such an announcement?

“For the next six months or year – there are going to be no layoffs. Streamlining, realignment doesn’t mean it has to be started off with layoffs in such scenarios.” – What’s wrong with this message to be put across to the employees?

After about 10-15 days of the merger the address should come for the employees preferably in person – especially with concrete plans for the company and employees – better if this dialog is in person and doesn’t talk a lot about how good the rat is. These employees know how good it is – they had built the rat. Honor them and give them a breath of fresh air. Tell them a plan of the changes and share with them the vision. They are going to reject it on first day but may be if actions translate into words – they might agree. They are rational emotional people who have just lost something they had aligned themselves for years.

If possible, I would like to hear the news not from press but from the person who manages the rat before the consolidation. If he really is a leader, it’s his responsibility to answer and tell – if not before the press just after them and he should deliver the first message. I would love to do the same – that’s my responsibility to the people who aligned with me.

Consolidations are here to stay, and soon there would be professional change management consultants who would arrange and stage the process. Corporate is interestingly strange money making stupid looking amusing machine.

Let’s enjoy the coffee and get back to work and prepare for the plan B, just in case we need it.