In 2015, a massive wave of business mergers occurred, valued at nearly $5 trillion worldwide. This was one of the biggest waves to hit the U.S. market in its whole 200-year-plus history, and the trend continues.
But when two businesses merge, technical and other problems are going to arise. Often, these integration issues, especially IT integration issues, will cause mergers to become unprofitable. But it need not be so.
Here are 4 key challenges to business mergers and how to overcome them:
When you have in-house IT systems of two separate companies that suddenly need to become one: that presents a big challenge. There are security issues, new purchases that may need to be made, old equipment that may need to be sold.
Selecting what new products to procure is the first step, but you also need implementation experts, and they aren’t always available on-staff. The best route in that case is to contract in the expertise you need to get the job done fast, right, and at maximum cost-effectiveness. Get more information here on how to seamlessly integrate IT equipment and software.
Lack of communication often creates a lot of unnecessary stress among workers and managers during a merger. Staff becomes disoriented, not sure what to expect down the road or what to do now: you need to reorient them. Communicate early and often, and keep it both clear and courteous.
Allowing uncertainty to fester is one of the main reasons for massive employee loss during a merger. “Reduction and replacement” plans should be shared upfront, or you may end up losing some of your best talent simply because you didn’t communicate with them.
You should also be vocal about communicating the reason for the merger with your employees and the corporate vision that merger rationale serves.
Everyone on the “new team” has to fill a specific role; but integration may necessitate a reorganization. You may need less IT staff, or you may decide to migrate (at least partially) to the cloud, for example.
Or, you may need to eliminate some positions, create other ones, and adjust the manger-worker ratio. This has the potential to overwhelm your HR department (and HR needs to be expanded and integrated too).
For this reason, it’s best to form a special “merger integration team” that does nothing but focus on making the merging process as seamless as possible, until it’s complete.
Besides possible changes in compensation, a merger will also involve resolving differences in employee benefits, like health insurance, life insurance, dental and vision insurance, pension programs, free child care during work hours, and employee discounts on the company’s products/services.
You don’t want to drive away good workers because they feel as if they are losing out on benefits. It may be your original offered benefits are as good or better than what the acquired company’s were, but you can’t assume “acquired employees” will see it that way.
Honestly compare the two company’s employee benefits. Do a survey of all employees (of both companies) to see which benefits they value most. Find a way to adjust, compromise, and integrate benefits programs that are still affordable. You should even consider calling in a special consulting firm to assist.
Both technologically and organizationally, you need to become one if your new, expanded company is going to succeed going forward. Everything from IT equipment/software compatibility to employee attitudes/culture needs to be examined and integrated.
Most mergers fail because of the lack of full integration and a loss of valuable talent that walks out the door. Seeing these challenges coming and tackling them intelligently can make your merger be “the exception.”
Jonathan Nelson is an influencer marketing pro with brownboxbranding.com who is passionate about building authentic relationships and helping businesses connect with their ideal online audience. He keeps his finger on the pulse of the ever-evolving digital marketing world by writing on the latest marketing advancements and focuses on developing customized blogger outreach plans based on industry and competition.