Eat or Be Eaten: How to Make Acquisitions Successful, Part II

By Judith E. Glaser

[EDITOR’S NOTE: In the previous article, Judith E. Glaser discussed the importance of the buyer’s mindset in determining whether an acquisition will be one of the 20 percent that are successful — or one of the 80 percent that aren’t. The exploration of how to set up a successful acquisition continues…]

Set the Context for Inclusion and Partnership

By “setting the context,” you level the playing field. Thus, power and hierarchy become less important than the results created through partnership.

Successful leaders are learning that the context they set around an M&A can completely drive its future success. Mergers and acquisitions always raise political (and personal) issues about who has more power, whose culture will dominate, and who will be replaced at the top. These concerns can terrorize employees as well as leaders from both companies, creating fear among all participants and damaging employee morale — which will clearly have a negative impact on the future success of the new entity being created.

Considering that this mindset is so prevalent, it’s no wonder that most M&As fail. A domination mindset can be disastrous, causing people to protect rather than share the most important dimension of their culture — their knowledge and insight, their wisdom and best practices. Withholding prevents open and honest conversations and destroys the innovative thinking that could propel the acquisition forward. Organizations that focus on domination fail to prepare the soil for the creation of the new entity in which both the acquiring company and the acquired company can bring forth their best thinking and best resources, while creating value for customers.

Surface Each Other’s Strengths

Most acquisitions are approached from an “I-centric” standpoint — “I am bigger than you and I am going to take over you.” Organizations that are successful take a radically different approach. They focus on a “WE-centric” approach — and the payoff is enormous.

A we-centric approach values the contributions that each entity brings to the table. The process of due diligence becomes one of “discovering” the best each has to bring to the table, and unearths opportunities for future innovations that can bring new value to customers.

We-centric approaches also focus on using the due diligence process to step outside the boundaries of both companies, and create innovative conversations about how to nurture rather than dominate the new entity.

VeriSign, the world’s largest online security company, grew in tandem with the growth of the Internet and through the continuous exploration of how to bring greater capacity to global commerce transactions. Over the years, and through 30 acquisitions, the company created a playbook with a rich palette of integration tools that reduced the challenges and increased the chances of successful acquisitions. From studying what works with great care, they have come up with a playbook that has proved to yield a winning formula, which is a we-centric approach that nurtures the new acquisition rather than consumes it.

Some lessons from VeriSign’s playbook worth sharing:

  • Mindset shift: Don’t think of it as a takeover, think of it as joining forces to create something bigger and better for everyone
  • Communicate daily
  • Deal with each acquisition uniquely — honor each company’s DNA
  • Ensure the mother ship does not try to control everything
  • Don’t impose the culture on the acquisition
  • Use common sense

During an acquisition, VeriSign collects and shares its wisdom throughout the organization. The three most important themes are:

  • Explaining what is going on to the acquired company,
  • Figuring out what it needs and providing it, and
  • Putting financial controls into place.

The Partnering Journey Is a Shared Conversation for Mutual Success

Successful acquisitions “map the journey.” And that journey includes many stops along the way, where sharing, benchmarking and redirecting take place while ensuring that both entities are in shared conversations for mutual success.

An example: Ward Mooney’s new division of Gordon Brothers, called the Retail Finance Division, was acquired by BankBoston to help them penetrate the growing world of retail with their unique boutique-lending offerings. A small company acquired by a larger company, the new division was uniquely positioned to provide loans to retailers in growth cycles.

Since that acquisition, BankBoston has been acquired by Fleet, and, most recently, Fleet has been acquired by Bank of America. As CEO of this new venture, Ward Mooney had a lot of decisions to make early on. He wanted to launch his team with the best resources, wisdom, and possibilities.

Regardless of what happened with other acquisitions in the past, Ward was determined that his team would be an example of what success looked like. He wanted the bank to say, “We made a great acquisition; this business is better than what we expected.” Yet, as good as his team was, it was hard to predict how individuals would handle something as dramatic as what they were about to enter into.

Perhaps the biggest challenge for the newly created company was that, while the new entity had an official name (BankBoston Retail Finance), there was no official history to the name. There was no legacy to bring forward except the individual experiences of those who came forward — no real identity except for the titles of each person in the hierarchy.

Identity is something built over time. It’s more than a title, and it is something we “share” when we are part of a company, a brand, or an organization. Ward’s new venture had no clear identity, mission, strategies, or vision. It was purchased for its economic value, and that was yet to be fully realized.

In spite of how good his team was in the past, Ward Mooney realized he had to create a new team — and to do this, he had to create a new, shared experience around which to build a new identity. Ward decided to run a “Leadership Journey” to ensure that the team members brought forward the wisdom they needed and let go of the past that was standing in the way of their future success.

Ward wanted to be in the fortunate minority — the 20 percent of acquired companies that succeed. He wanted to give his team a way to start fresh and create a pathway for success. Within seven months after their Leadership Journey experience, Ward’s team produced results that exceeded their year-end expectations. What happened during this experience that made such a powerful difference?

Warding Off Negative Energies

Much to his surprise, Ward’s team embraced the Leadership Journey with great enthusiasm. Prior to the meeting, there were undercurrents of skepticism about the roles people would play when they became part of BankBoston. Many of the team members came in to the process with the “stories” they’d heard from others about how companies get acquired — the first thing that happens, the rumors went, is the firing of the existing team.

Ward felt that if the team came in with a positive mindset — without old baggage from the past and with an openness to embrace the change — then they would be more prepared to show dramatic results immediately.

That’s not all Ward learned. Check out Part 3 in Judith Glaser’s “{Eat or be Eaten: How to Make Acquisitions Successful” series to learn about “The First 100 Days.”

Judith E. Glaser is a change agent and executive coach, and refers to herself as an organizational anthropologist. She’s been a speaker for Vistage and TEC for more than six years, and is the author of three best-selling books: Creating WeThe DNA of Leadership and 42 Rules for Creating WE; her new book Conversational Intelligence: How Great Leaders Build Trust and Get Extraordinary Results (Bibliomotion) will be published October 1, 2013. You can e-mail Glaser at jeglaser@creatingwe.com.
Originally published: Oct 2, 2011

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