Driving home after a busy day, I called a few colleagues here in Israel to wrap up the day – they answered cheerfully within the first ring tone. But, as I dialed a team member from our recently acquired company in Vienna, I glanced at my watch and hung up. There are certain business practices that are acceptable with one team but not another, and during consolidations, sensitivity to those differences is key.
Driven by technology and data, the advertising sector continues to evolve, and consolidation has become the new industry norm in strategic movement. Mergers and acquisitions are healthy for a rapidly changing advertising industry, and the natural step for a large pool of small operators to successfully compete with giant brands like Google and Facebook. Joining forces means streamlining innovation and improving efficiency – reducing the daisy chain and the number of advertising sources. Higher caliber products are forged when companies join and share strengths and, of course, share data too.
Like any major operation, mergers, acquisitions and other forms of company consolidation can drive the resulting entity to new heights of success and functionality, but they can also lead to their doom if certain steps are omitted. I have learned important lessons from multiple acquisitions over the last few years on spearheading as seamless a consolidation as possible, and how steps taken on "the day after" can set the tone for the new conglomerate moving forward.
Uncomplicating Consolidation
The consolidation process is challenging; there are no guidebooks or video tutorials. There are, however, decisive elements of the process that can and should be emphasized. It is important to remember that you’re bringing people, not just technology, together. And to bring people together, you must first get to know them and understand how they perceive the impact of the consolidation on themselves.
Issues having to do with internal culture are still the main reason a merger and acquisition fails, and no matter how great the technology or benefits of the merger, serious cultural clashes and the resulting animosity can cause the newly consolidated entity to eventually drown entirely under the weight of its own internal clashes. I’ve found that focusing on culture and communication as a top priority, at least initially, can be more important than the more glamorous subsequent business moves.
Ask the Right Questions
Before consolidation, delineate the plan moving forward. It is vital to be acutely aware of the reasons for consolidation and have intimate knowledge of the strengths and weaknesses of both companies. Decide whether the acquired company is going to remain a standalone entity. If so, the communications and cultural changes occur on the C-level and require less detailed attention. Ask yourself if you are consolidating two similar entities to strengthen both companies and grow as one, or if you are acquiring a company that offers a solution for a current weakness.
Another critically important aspect of a merger and acquisition is to consider is location. Mergers and acquisitions involving dissimilar global regions will require attention paid to cultural differences inherent to the new union, in addition to the corporate culture. At Matomy, after acquiring a company in a different country, we sought advice from local consultants to help us truly understand the other company’s region and professional environment. We asked questions that may seem completely irrelevant – such as local sports teams, weather, city life and holiday seasons. Knowing these aspects of daily life and what happens on the ground allowed us to create a plan that would be successful in developing a joint culture, still sensitive to their everyday work environment.
In short, be clear on the motivation behind this seismic change and develop a formula well in advance to ensure that you are on the path to building a DNA that strengthens this new entity and acknowledges the similarities and differences that will forge the new foundation.
The Day After
It’s the day after the big transition – now what? Finances, research and development may seem higher on the totem pole, but don’t disrupt everything on the first day – consolidation is a work in progress, so prioritize intelligently. While you are gaining information and insight from your new team, there is only so much you can find out in the beginning – some things take time. See how the team adapts to the new changes, and modify your plan if necessary. You might choose to not move in together straight away after the wedding.
Furthermore, keep the interpersonal politics in mind because they will be there. This isn’t petty or immature, it’s human nature – and acknowledging the new reality of employees on the floor is paramount. Identify key personnel and listen. Yes, listen – employees won’t necessarily start trusting you on day one, but they will continue to trust those they’ve always trusted. A true leader consults and makes a concerted effort to keep everyone in the loop with regular updates and periodic face-to-face meetings that show your commitment to the team. If you want people to care about the company, they need to feel heard. But be clear about who is in charge. Different types of mergers mean that companies keep different amounts of autonomy – whatever your strategy, make sure to minimize confusion about leadership.
Don’t Forget Partners and Clients
Being forthcoming and communicative about internal company goings-on is important for maintaining a trusting relationship with clients as well. They are a part of this journey too and the more they feel informed, the greater the sense of security. The consolidation, at its heart, brings many benefits for your partners. They need to be told, clearly, what’s in it for them. In our industry, the majority of mergers and acquisitions result in better technology, increased transparency, and a richer offering. Because most people are hesitant in the face of change, the clearer you are, the more likely they will accept the new reality. While it is true that most mergers and acquisitions don’t succeed because of cultural issues and communication deficits, in my experience, the rewards far outweigh the risks if you invest the right thought and care into the day after your acquisition investment. Know where you are, where you want to be, and check that each decision will lead you in that direction.