Compensation Force

Top Team's Signals are Key to M&A Success

Having had the opportunity to be involved in and observe firsthand the dynamics of a number of mergers and acquisitions lately, I continue to be on the lookout for wisdom regarding the people side of successful integration.

In an article Successful Mergers Start at the Top (free registration may be required) published in the December 5, 2006 edition of The McKinsey Quarterly and excerpted from their forthcoming book Mergers: Leadership, Performance and Corporate Health, authors David Fubini, Colin Price and Maurizio Zollo discuss the pivotal role of the "top team" (the group of senior managers who share general responsibility for the organization's future).  I found the following paragraph to have particular resonance:

But the top team must do more than just talk about the new company, adopt its language and trappings, and act according to its norms. The team must become the new company in the full sense.  Its messages, processes, and targets must deeply incorporate the aspirations of the new company in a way that is visible to managers, employees, and even outside observers. As the top team goes on to integrate the company down the line, it in effect re-creates itself. The company is not just rolling out messages, processes, and a set of targets; it is rolling out itself.

Clean Teams: An Emerging Tool for M&A Integration

I just finished an article which introduced me to the concept of using "clean teams" to support integration planning (particularly in the areas of people and people programs) for mergers and acquisitions.  It was a timely piece for me, as I am in the final stages of helping a client integrate a key acquisition and this work has really reinforced for me how important understanding, planning for and addressing the human element of these transactions is for their success.

The article I read, "The Clean Team: An Emerging Tool for M&A Success" by John Koob, published in the 3rd Quarter 2006 issue of the WorldatWork Journal (Volume 15, Number 3) has the following to say about the role and work of clean teams:

A clean team is a group of individuals -- operating under certain protocols and prior to regulatory approval or consummation of the deal -- who assemble, review and analyze sensitive, competitive and other confidential data. The team is most effective during the period between when a transaction is first being negotiated to when final documents are complete and regulation approval is achieved.  Many integration issues -- at a detailed level that neither party to the transaction can legally work -- can be assessed and planned with the team.  The team's value to merging organizations can be measured in the hundreds of millions of dollars.  HR leaders, corporate board members and executive management would do well to consider and seriously discuss the strategic advantage of this approach.

Clean teams can be instrumental in identifying and planning for the integration of compensation and benefits programs.  Waiting until after the "deal is sealed" to begin this work extends the period of uncertainty for employees, with morale and productivity suffering while people wait to find out how they will fare under the new organization.

The article also highlights a survey of dealmakers done in 2005 which points to poor integration planning and implementation as a top reason for M&A failures.

More information on clean teams can be also be found in the following resources:

• Mercer M&A eBulletin "Capturing the value of your deal with a clean team"
• "The Intelligent Clean Team:  Ensuring Value Capture in Mergers and Acquisitions", Chanmugan, Ravi, Walt Shill, David Mann, Kristin Fiecry & Bill Bursche. Journal of Business Strategy, Volume 26, Number 3, 43-49.

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