Relationships in M&A: The Differentiating Factor

Company Relationships in M&A: The Differentiating Factor

If you consider just how much time goes into an M&A transaction, from extensive financial analysis to the intricate process of evaluating the target’s corporate culture, then you can imagine how disappointing it would be for a venture 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, but 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, and 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, rather 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, but it is essential in a business context to put any differences with particular individuals aside for the sake of the firm’s success. As it were, 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. As a direct result of being apart of such an environment, incoming employees post an acquisition will be able to transition into the team much more comfortably in the knowledge that their colleagues will have their back from the very first moment. One of the crucial aspects of ensuring this is the case is creating a workplace that promotes open dialogue amongst its workers, in which employees can feel comfortable in discussing their feelings, ideas and perspectives regarding 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

What is vital to consider that in this disruptive moment in time for the world of business, arguably the most differentiating factors of a firm are related to innately human-oriented skills and capacities. Be it personalised customer service, corporate communication or negotiation skills, these are all linked to interpersonal and emotional capacities, and it is unsurprising to see that the companies who most effectively maintain strong internal relations are the ones that will most effectively execute these differentiating external operations.

The other thing to recognize is that neglecting internal relationships can be as damaging and harmful to a company, as maintaining well-established internal relationships is beneficial. Resultantly, to set this in a sporting analogy, if your company fails to address internal relations whilst your competition does, it is the equivalent of losing two games in one as you see your competition climb 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. Particularly for companies with incoming acquisitions, if they brush off the notions of internal understanding, team bonding and healthy communication, then it is more likely than not that they will encounter unwanted problems in the future. 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.

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