Management Information |
Why Half of All Mergers Fail After the Honeymoon Ends
Marriages and corporate mergers in America have at least one thing in common, more than 50 percent end up on the rocks. In fact, according to a McKinsey study, only 23 percent ever recover the costs of walking down the corporate aisle. Another study showed that over 40 percent actually lose shareholder value. These statistics should quell the corporate urge to merge, but, like young lovers, logic seldom gets in the way of romance. A merger between families illustrates the difficulty of creating an ideal marriage. Two single parents, each with their own children, pets, and old habits, decide to marry and join their families into one. Because mom and dad are so in love, they fail to see that the kids don't get along, the cat hates the dog, and their single TV can only handle one show at a time. Reality slowly begins to creep into paradise. The cover of the February 7, 2005 issue of Fortune reads "Why Carly's Big Bet is Failing, referring to Hewlett Packers acquisition of Compaq. And the list goes on: Take Bell Atlantic and Nynex. They are already experiencing resistance to change from some of their family. The Communications Workers of America have voiced concerns about this merger. Both companies appear to have different approaches to unions. Bell Atlantic appears more confrontational, while Nynex in recent years has tried to build stronger ties to the CWA. How this gets handled, might be the first test of who holds the remote control during prime time in this new family. Will the telecommunications giants work together to develop a strategy for working with the union? Or, will they leave things to chance? Bell Atlantic and Nynex, was not the only engagement announced recently. Time Warner and Turner, Aetna and US Healthcare, SBC Communications and Pacific Telesis Group have promised to join hands as well. In each instance, the decision to merge makes good business sense. Bright people using sound data, keeping the interests of shareholders in mind, made these decisions. Unfortunately most of the attention will be on regulatory issue, finances, and grand organizational designs. The subtle and seemingly soft issues like how decisions get made may be left to chance. If so, this could be disastrous. The betrothed companies will need to pay attention to the fact that they are attempting to blend different ways of working. I urge these companies to consider the following as they work on their wedding vows.
Since each company believes that its way of operating is how God intended life to be in corporate America, major differences in culture could be difficult issues to face. It will important to persist. Typically, the more powerful partner prevails, but only at a cost. The "weaker" partner resists being told to change and this leads to subtle or profound resistance that hinders or stops efforts to merge operations. AT&T's purchase of National Cash Register was a disaster, in large part, because the far-larger parent company tried to inflict its culture on a company that was proud of its rich heritage. There is a choice. The two companies can identify these differences. Recognize what's good about each culture and then determine jointly how they will face the future as a unified force. All these proposed mergers will face many tests to their cultures over the coming months. They can use these incidents as opportunities to examine differences and consciously select a way of working that fits the challenges they will face in coming years, or they can just hope they will live happily ever after. Rick is an advisor to organizations on ways to lead Change without Migraines?. He is author of many books on change including Why Don't You Want What I Want? and Beyond the Wall of Resistance. You can access free articles and tools at http://www.beyondresistance.com.
MORE RESOURCES: Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting |
RELATED ARTICLES
How to Say No Rejection hurts. No one likes to give it or to receive it. Unveiling the Value of Your Expertise All of us have knowledge, expertise, and experience that others can benefit from. This is one of the reasons we play some of the roles in life that we play: leader, trainer, teacher, coach, mentor, and more. Conflict at 36,000 ft This was supposed to be one of those sleepy flights that leaves late, crosses two time zones, and arrives at 11:00 p.m. The Death Spiral Sometimes things just happen. Maybe we lose focus and take our eyes off the ball. Using an Appraisal to Benefit Your Organization PERFORMANCE APPRAISALS BENEFIT THE ORGANIZATION:Appraisals help spot employees with potential for advancement. Appraisals bring attention to the so-called high-potentials - people who have both the will and the ability to excel in the organization. Innovation Management - some ideas are better than others Creativity can be defined as problem identification and idea generation whilst innovation can be defined as idea selection, development and commercialisation.There are distinct processes that enhance problem identification and idea generation and, similarly, distinct processes that enhance idea selection, development and commercialisation. Business Relationship Germs In management seminars I often compare debt to an infection. A reasonable amount of debt will not kill a business, but too much debt will. Collections Management How long does it take your customers, clients or patients to pay you for the products or services you have provided?Have you developed a consistent collection management program?Your answer to the above questions is a leading indicator as to how well you collection management is. Sending an invoice doesn't always result in payment. Money, Motivation, Success and Who? It was 7:30 on a Saturday morning, and I was setting up to do the opening keynote for the conference. For some reason--I have no idea why--the sound man thought his ten year old daughter would enjoy my presentation. Knowledge Management - Keys to Successful Communities of Practice (Networks) How can I make my community of practice truly effective?How can I prevent my network becoming a "notwork"?Communities of practice (networks) lie at the heart of successful knowledge management in most organisations. They are the lifeblood of informal exchanges of knowledge. Few Things Are More Destructive Than An Insecure Boss Few things are more destructive to a career than a boss who is insecure. Unfortunately, it is a near certainty that most people will encounter one or more such persons along the way. On The Job Training is Something You Canâ??t Afford to Skip Trained employees are more productive employees; thereâ??s no doubt about that. Whether youâ??re your only employee or whether youâ??ve got a growing staff, put OJT (on the job training) at the top of your To-Do list. Why Half of All Mergers Fail After the Honeymoon Ends Marriages and corporate mergers in America have at least one thing in common, more than 50 percent end up on the rocks. In fact, according to a McKinsey study, only 23 percent ever recover the costs of walking down the corporate aisle. Oasis in a Cash Flow Desert - Four Resources That Increase Small Business Capital Streams For small business owners, an enthusiastic vision for smooth, steady growth can become nothing more than a mirage once company cash flow problems begin to heat up. Most will struggle with the timing of payment from clients or customers at some point, all while attempting to pay their own bills in a timely fashion. The High, High Price of Distrust A paper manufacturer with over 300 employees once announced that it was planning to move to more spacious and attractive premises thirty miles down the road. When staff members heard the news, they were very apprehensive. Better Manager Skills - How to Learn When you first take over a department, expectations are usually high but operations are sometimes in disarray. The staff is disorganized, goals aren't being met, and hours are spent on unproductive tasks. Interviewing: How to Stay Out of legal Hot Water Some interviewers ask great questions; others ask dumb questions; and, worst of all, some ask questions that can get them into legal hot water.Every recruiter, hiring manager, executive, and department manager must realize that asking the wrong questions or making improper inquiries can lead to discrimination or wrongful-discharge lawsuits. Nine Steps to Help You Develop Your Potential Go into any bookstore and you will find a big selection of self-help and personal improvement products. Most everyone (and I'll bet everyone reading this) wants to improve. Does My Bum Look Big in This? If a good manager asks his workforce for their opinion of him he will receive their expressions of approval and be satisfied that he is doing a good job.If a bad manager asks his workforce for their opinion then he too will receive their expressions of approval because as we all know, the best way to get a bad manager off your back is to agree with him. Corporate Governance for Business Owners It is clear that good Corporate Governance is in the best interests of shareholders of public companies, but how can it benefit shareholders of private companies and other business owners?Will a good system of corporate governance increase the bottom line?One of the elements of a good system of corporate governance is ensuring that the role, and the boards' expectations, of management are understood.SeparationSeparation of the board and management is often lacking when it comes to small medium sized enterprises. |
home | site map | contact us |