Blog: People-Related M&A Failures – Avoid These Pitfalls

Tue, 22 Oct 2024 14:00:00 +0300
Business / economics, Science, Working life

"M&A integration is like a relationship, where success cannot be defined solely by whether one party stays or leaves. Achieving goals becomes even more difficult if common integration failures are simply blamed on cultural conflicts," writes Timo Järvinen, Co-Founder of NayaDaya Analytics Inc., the Finnish creator of the game-changing People Risk Analytics™.

When I discuss people-related risks with people in companies acquiring another companies, I sometimes hear comments like, “In our acquisitions, not many people tend to leave. That’s why we don’t need to pay extra attention to people risks.” Sometimes it even seems desirable that some employees resign.

This response is partly my own fault for emphasizing employee turnover and productivity collapse as the major people risks in integrations. In short meetings, you need to cut corners. However, the people-related risks – and the corresponding upside – are much deeper and more far-reaching.

M&A Integration – Building a Perfect Relationship

The risks are high, there’s no doubt about that. According to many studies, mergers and acquisitions mostly fail or do not reach their goals. People and cultural issues are recognized as the most common reasons for failed integrations.

To approach this risk practically, let’s consider the “marriage” of the buyer and the seller as a relationship. When acquiring a company and its people, how do you ensure the two parties not only continue living under the same roof but also achieve something that serves the interests, goals, and well-being of both?

Building and nurturing this kind of relationship should be a priority to avoid integration failures and achieve M&A goals. In integrations, you are dealing with human beings whose actions and decisions are guided by their emotions. Their stagnation, resistance, or enthusiasm – even their willingness to go the extra mile – depends on the true inclusiveness of your integration.

Do you truly know how the acquired employees feel about the integration, and have you genuinely given them a chance to influence it?

Building a strong relationship is one of the key approaches and an excellent way to achieve the goals of an M&A integration, and to realize the original business benefits of the transaction.

Culture Is Everywhere – Hard to Define, Hard to Manage

Culture is often blamed for integration failures. It is clear that the impact of often-conflicting cultures, encompassing values, behaviors, and practices, presents a significant risk to integrations. However, focusing on culture can lead to overly complex processes. Furthermore, frustration with the slow, confusing, or difficult integration process is often mistakenly attributed to cultural conflicts, when in fact, a more professional and well-managed execution could resolve many of these issues.

Using the relationship metaphor, the most effective way to find the right actions and communications to make the relationship work for both parties may not be an all-encompassing analysis of multiple cultural aspects. Instead, empathetic and practical communication can deliver better results – focus on understanding how the other party feels about the relationship and why. It’s about identifying the causes of friction and determining how to address them, while also recognizing and strengthening the factors that promote a healthy, productive relationship.

This applies to any integration.

To get simple but crucial insights, you don’t need qualitative and quantitative surveys with dozens of questions. What you need is an effective way to leverage emotion and behavior science. Fortunately, you don’t need to be an expert in science yourself. We’ve done all the hard work for you during the many years of developing the patent-pending People Risk Analytics™ method and technology.

Don’t Stumble – Use a Ready-Made Solution

This digital solution is based on science, AI, and M&A integration intelligence. With our simple cloud application, you need to ask only three questions from your employees, three times during the integration. By doing nothing else, our sophisticated, groundbreaking analytics provides you with critical insights for building and nurturing a healthy relationship. People Risk Analytics™ highlights 1) people risk levels, 2) their root causes, and 3) actions and communications to build successful integrations and sustainable growth.

Do not stumble over vague cultural concepts. Do not rely solely on traditional satisfaction or eNPS surveys that fail to understand behavior, especially engagement and disengagement. Furthermore, do not assess people-related risks and opportunities based solely on employee turnover numbers. And under any circumstances, do not underestimate the importance of human emotions and behavior in the relationship between the buyer and the seller – the success of your M&A integration depends on people.

Fortunately, making all this happen does not mean extra workload. On the contrary, it means fewer tasks to manage. People Risk Analytics™ offers an easy, effective, science- and AI-driven method to build the relationship you need for successful integrations.

Join the webinar: M&A Success Through a Healthy, Productive Relationship

Want to dive deeper into this topic, crucial for your integrations? Curious to learn more about the astonishingly intuitive and effective solution in just 45 minutes?

Webinar: M&A Success Through a Healthy, Productive Relationship
Time: Wed, Oct 30, 2024, 9:00-9:45 AM GMT (e.g., London)
Hosts: Midagon & NayaDaya Analytics Inc.

Don't worry if the timing doesn't work for you – please register anyway, and we'll send a recording to all registrants shortly!

Register here: https://register.gotowebinar.com/register/5254596198687577942

Blog Author / Contact:
Timo Järvinen, Co-Founder, Value Creator, NayaDaya Analytics Inc.
Tel. +358 40 505 7745, timo.jarvinen@nayadaya.com