Five on Friday- Mergers and Acquisitions

Categories: Five on Friday

5friNews broke recently that Johnson & Johnson will acquire medical-device maker Synthes Inc. for $21.3 billion, giving the U.S. health-products giant a commanding lead in the global market for surgical devices used to treat fractures and traumatic injuries.  Globally, M&A activity for the first quarter of 2011 reached nearly $800 billion dollars – the highest level since 2007.  Yet despite this promising news, statistics show that 80% of all mergers or acquisitions are doomed to fail.  The recession gave CEOs a great excuse to explain why their merger or acquisition failed, and no one could disagree.

Now that the recession is in the rearview mirror, leaders need to examine the real reasons behind M&A failure.  I have seen the warning signs, and  it’s NOT the details of the merger.  The real M&A is the mismatch and anxiety caused by one or more disparate corporate cultures being forced together, and expected to work as one cohesive unit.

Here are five warning signs your company’s merger or acquisition is in trouble:

  1. Lack of Integration or “On-Boarding”: employees need to understand the company culture and where they fit in.  Showing them the ropes, explaining working units within a company, and where they fit in is critical. Think of standing before a big map with a “You are Here” sign.  Employees want to find that spot and know how and where they fit in the company’s road map.
  2. Lack of Communication: employees crave communication from the top.  It reduces anxiety and stress which leads to lack of productivity.
  3. Lack of Collaboration: Collaboration is key to any company’s success.  Bridge the gap among units who are coming into a new working situation by getting to know them and allowing cross-pollenation of cultures and ideas.  Then, select the best ones to chart a course for the direction of the company.
  4. Lack of Training: US companies spend $60 Billion/year in training, yet most programs have no discernable R-O-I, because companies don’t internalize the process.  If you invest in training, make sure you go back to the office and execute what you’ve learned.
  5. Lack of Transparency: Avoid secret dealings.  Even if you don’t know what’s going to happen, let staffers know you don’t know.  Being secretive creates anxiety and mistrust.
Libby Wagner
Author: Libby Wagner

President, Chief Visionary Officer