Great Ideas: Making mergers work

Mergers and acquisitions are a short cut to growth. They’re also tricky business. If you’re about to embark on a merge, then heed the advice in Mastering the Merger by David Harding and Sam Rovit. The authors explain a few ways to avoid problems before they start:

• Elicit feedback. Once the deal is announced, it’s the CEO’s job to go out and explain the transaction to all parties, including customers, employees, vendors, investors, etc. But that’s only half the job. The other half involves listening to those parties’ concerns. Set up forums and teams to ensure feedback gets to you quickly and unfiltered.
• Establish early warning systems. Certain telltale signs can warn you of trouble ahead with the deal — but only if you arrange ahead of time to monitor certain key areas. The areas depend on your type of business. For example, if you are in a service business, where customer loyalty is extremely important, then customer feedback will serve as an early warning system.
• Monitor operations closely. Problems with customers and staff tend to crop us soon after a deal is done. Operational issues, by contrast, can be much slower to develop. They might show up first as a shortcoming on the information technology side, which may take a while to reach a flashpoint. All of the sudden, you can’t get answers to critical questions, such as, “Who is our biggest customer? Which of our product lines is most profitable?”