M&A: Executing the Merger

>> A successful merger or acquisition requires skillful navigation at every step, but when the deal has been sealed it's the integration

of the merger that will ultimately count.

>> Steven: Two thirds of M&A deals don't succeed because companies fail to meet their objectives. Integration is imperative and if you wait

until the ink is dry before planning the integration you're already too late. An integration strategy has to be planned from the

beginning and put into play almost immediately.

>> Steven Ramirez, Managing Partner at Beyond the Art, a firm specializing in merger integrations, joins us to explain why the execution

of an M&A is vital to its success.

>> Steven: The rate at which M&A deals fall apart at this stage is quite amazing, here are the top 5 mistakes. First, the company

fails to assess the changes that are required in the overall corporate culture, that are gonna make the merger work.

>> Besides the fact I have no way to incorporate all these people, they have nowhere to sit.

>> Steven: This results in frustration and delays in execution. Second, company fails to develop short, medium and long-term plans

with different goals and measures for each timeframe.

>> Fine, so now we have our presence in China what's our long-term goal?

>> To make more ice cream.

>> Okay, so what's our short-term goal?

>> To make it more yummy.

>> Steven: Third, company fails to quickly announce the new structure and job roles and this leaves employees wondering, what is happening?

This results in a productivity slump and can become permanent.

>> Those ice creams aren't gonna make themselves we need a plan, quickly.

>> I know, I'm working on it.

>> Steven: Fourth, company fails to cope with the inevitable, inevitable personal and personnel conflicts that come from such a highly

emotionally charged process.

>> I can't handle this I'm leaving.

>> Steven: Which results in your key talent walking right out the door.

>> Work something out, write it down and we'll see, no promises.

>> Steven: And the fifth, the company fails to budget for the integration of the cross department infrastructures resulting in the

failure of pretty much everything. So, to ensure the success of your merger here are my recommendations. This is the time to talk

to your employees new and old. The M&A deal may have been done in secret but the chances are the rumors are already out there.

>> So does everybody know?

>> Pretty much they just need to hear it from you.

>> Steven: Now, if you're a public company you need to get legal advice about the timing of your employee communications. But if you're

a private company this is your opportunity, spend more time than usual with groups of your employees, explain the new world order and

let them know how they fit in.

>> I tried to make a decision that I felt would be the best for the company overall.

>> Steven: Let the world know what an amazing deal this is and why, explain the benefits.

>> -- together and I think it's really gonna open up a lot of doors for us.

>> Steven: Once you announce the merger everyone's gonna be watching, your customers, your employees, investors, maybe even the media

and they all want to know one thing, why? Your deal has got to make sense to them. One of the biggest factors in the demise of

mergers is the failure to effectively combine the cultures of the two companies.

>> Hey

>> Hey

>> Steven: Acquiring companies often make the mistake of believing that the acquired company is just gonna have to adapt to the pre-existing

culture. Usually a more successful approach is to migrate to a new culture one that's better aligned with the new mission of the

combined organization. The new culture will allow everyone a fresh start and an equal beginning. The days of massive layoffs due

to mergers may be a thing of the past.

>> So, I don't know what to tell them, no one knows what's gonna happen with their jobs.

>> No, don't worry about it, stop worrying about your department nobody's getting laid off.

>> Steven: Now, of course there can still be layoffs due to duplicate roles but the deals of recent years have concentrated mostly on

market growth and the retention of key players within the acquired company. So, the restructuring and realigning mostly involves

establishing new reporting structures, internal operations, job roles, titles, those kinds of changes. As you can imagine when two

companies become one you still have two different infrastructures at work in pretty much every department. Now, computer and IT that's

probably an obvious one but even more important are changing the policies in finance and HR. Finance because, well, it's important

to know how money flows into the organization and how it gets controlled, which bank accounts are gonna be used, who are the signatories?

I think HR is even trickier mergers tend to bring up a huge amount of "me" issues within the workforce.

>> Everybody's asking me what's gonna happen to them but if I do all this integration work what guarantees are there, even for me?

>> Steven: Your employees want to know, how are their benefits and policies going to change? The silver lining here is that there is

a silver lining the execution and integration of M&A deals are very difficult and at times overwhelming, you'll be under a great deal

of scrutiny with tremendous expectations. But, if you plan accordingly and stay the course you will succeed.

>> For more information go to BNET.com.