A 2018 survey by Deloitte found that mergers and acquisitions (M&A) activity was accelerating this year. There are not only more deals, but larger deals, and technology acquisition is the top driver of mergers and acquisitions.

When companies combine, both leadership and culture must redefine themselves for the new entity.

Financial and legal due diligence are givens during M&A activity because it’s absolutely essential that every technical and legal aspect of the transaction is done correctly. But in all the details involved in a merger or acquisition, it can be easy for leadership to place the concept of leadership integration under the new entity on the back burner. This can lead to large, but avoidable problems.

Leadership Challenges During Mergers and Acquisitions

During a merger or acquisition, the risks of losing people, experiencing lower productivity, and logging lower profit levels are elevated. The leadership teams of each party to the transformation may do things differently, and this can exacerbate risks. It’s not unreasonable to include leadership training of the new, merged leadership team as part of the merger or acquisition process. The new business will be different from each of the formerly separate businesses, even if one company is essentially “swallowing up” the other.

When the leadership teams of the businesses that are going to merge or undergo an acquisition are pulling in different directions, or have different priorities, difficulties can arise. It may seem like a luxury to use leadership training during the midst of the great upheaval of M&A activity, but in fact, it may be one of the best investments the new, merged company can make.

The Strong Leadership Integration Team

A strong leadership integration team can be the difference between a mutually-beneficial, productive change in leadership and a confusing disaster. Will a new CEO be named once the new entity is formed? If so, CEO coaching may be a smart investment to help ensure that the transition is smoother and more productive.

It’s also important that the leaders in each organization know who their cohorts are at the other and how the leadership structure will change. It may not be possible at the outset to know exactly what roles each leader will assume, but with a leadership integration team, hammering out those important details can be done with transparency and the least amount of disruption.

Good Leadership Integration Inspires the Rest of the Team

Transparency and honesty are the keys to maintaining positivity throughout the M&A process.

A successful merger or acquisition doesn’t simply graft one company onto another. It requires blending of two corporate cultures – a task that is no less challenging and no less important than the legal and financial merging of the companies. When leadership appears baffled or at loose ends, it hardly inspires confidence from the frontline workers. Therefore, leadership training should be a priority at the very beginning of the merger or acquisition process, as should formation of a leadership integration team.

When leaders have defined goals for the process, know what they want the new organization to look like, and have a practical plan to get there, it carries weight with the everyday employees, who may sometimes wonder if their needs are considered as the two businesses combine. Strong leadership and clear goals inspire team members’ confidence that the merger or acquisition makes sense and will lead to better things for everyone.

Leadership changes are inevitable when two companies merge or when one acquires another. The stakes are high, as is the risk of misunderstandings or turf battles. It’s critical for the leadership of both businesses to take a proactive approach to the merger or acquisition, bringing in leadership training help if necessary, so that upheaval is kept to a minimum and there is less confusion.

When leaders get out in front of the merger/acquisition narrative, they can shape it better than they can if they’re simply reacting to the latest legal or financial step in the process. This benefits not only the leaders themselves but every team member from the companies that are combining. If you’re interested in learning more about meeting the many challenges of corporate transformation, including the challenges of going through a merger or acquisition, I encourage you to check out my books, which go into depth on many of the most relevant topics surrounding cultural change and cultural transformation.

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