Consider how much time an M&A transaction requires. From financial analysis to evaluating a target’s corporate culture, the process is extensive. It would be extremely disappointing for a deal to fail due to poor company relationships. As it were, it is estimated that somewhere between 70% to 90% of M&A transactions fail to achieve all of their goals. It is fair to suggest that much of this would come down to poor relationships in M&A.
On face value, the concept of individual relationships within a company can seem rather trivial. However, the reality is quite the opposite. Just like any functional group, success will largely be derived from how well the team is able to work together. Naturally, this will significantly depend on relationships within this group. In turn, the concept of fostering relationships must be taken extremely seriously within any business, and this is never more relevant in the context of a newly merged company post-acquisition.
The Importance of Company Relationships
With this in mind, a company must consciously and actively prioritise the promotion of positive relationships internally, to the extent that it can be considered a part of the company’s corporate culture. As we have alluded to in our previous article, the advantage of having a strong and balanced corporate culture cannot be overstated, and resultantly, the companies that dedicate the most time to developing it will often rise above those that fail to do so.
As such, the task of fostering company relationships is not just a job for top management and human resources. It is for each and every employee to truly embrace. Alas naturally, we as human beings will not always enjoy the company of absolutely everyone. However, it is essential in a business context to put any differences with particular individuals aside for the sake of the firm’s success. A solid foundation of strong working relationships internally will exact a high degree of confidence within a team to deliver fruitful results, in a genuinely supporting environment.
How to Ensure That an Acquisition Is Successful
This latter point in particular, the maintaining of a supportive workplace, is absolutely essential for company morale. Being part of such an environment helps incoming employees transition smoothly after an acquisition. They can join the team knowing their colleagues will support them from day one. A key factor is creating a workplace that promotes open dialogue. Employees should feel comfortable sharing their feelings, ideas, and perspectives about business operations.
One of the major benefits of an acquisition is exactly the fact that you will obtain individuals with varying opinions, and so to supress anyone with a difference of perspective is to truly waste an opportunity to improve the company. As a whole, this notion derives from the concept of trust. The sooner a company can generate a genuine level of trust amongst its employees, the sooner it will truly be able to promote the comparative advantages of individuals within the firm so to increase input overall.
Be Careful: Do Not Neglect Internal Company Relations
In this disruptive moment for business, the most differentiating factors of a firm are often human-oriented skills. Personalized customer service, corporate communication, and negotiation all rely on interpersonal and emotional abilities. It is unsurprising that companies with strong internal relationships execute these external operations most effectively.
Neglecting internal relationships can be as harmful as maintaining them is beneficial. To use a sporting analogy, if your company ignores internal relations while competitors focus on them, it is like losing two games at once. Your competition climbs the proverbial ladder above you.
The Acquisition Process Should Not Substitute Personal Communications
Overall, a happy company is a strong company, and this derives from the absolute foundations of team affairs. For companies with incoming acquisitions, ignoring internal understanding, team bonding, and healthy communication is risky. Doing so makes future problems far more likely. Even as early as the acquisition process, “data rooms and software tools should augment, expedite and manage the voluminous amount of data and information… but they should not be a substitute for direct, personal communications.”
After all, employees just like any human, are emotional beings and shouldn’t be treated in a mechanical or rigid manner. Overall, it is always in everyone’s interest to promote genuinely warm and open working relationships in any company.