Merging With a New Entity

Merging With a New Entity
Monday, December 24th, 2012 Scott Bossart

                If you are one of many companies in a position for growth, you could be in a position to merge with another company.  It can prove to be a daunting task to accomplish successfully.  There are many facets involved and several aspects of both organizations that need to be transitioned in order to achieve a future vision which is sustainable.  While the best course is to have considered and mapped everything out ahead of time, the reality may dictate doing much of it afterwards.  While not ideal, it can be done if the overarching vision is established ahead of time to guide and direct everyone towards a common goal and common ground.  There is also the personality factors that can influence decisions and potentially derail the direction you want the merged organization to head towards.  In some cases, you hear of mass sweeping replacements of staff while other cases everyone is kept and pandered to.  Neither of these situations are ideal for future sustainability.  Change must be accepted from perspective of both organizations being merged…the parent and the absorbed organization.  Managing the change can be a challenge as well, but if the vision is solid, the direction understood, and the commitment held in focus, even though the path may be bumpy the end result will be value added and set the stage for long term sustainability.

                During the time of merging with another organization, business, or entity, it is a good time to consider setting the stage for the future.  It is a unique opportunity to implement necessary adjustments you feel are required for long term growth.  It will be important to dig into the processes, culture, and business activities used in use by both organizations so both can be merged into one seamless organizational structure and operating standards.  Naturally you do not want to take anyone or any process backwards in time, but in order to obtain consistency through the organization, some reversal may be necessary.  Of course, this only if a step backwards is the most efficient for moving everyone forwards.  This concept might sound questionable, but once fully understood can be applied properly.  Managing the culture can be far greater in importance but also much harder.  It is important to focus on what is in the best interest of the organization, weighed against the impact to the staff and employees, then finding a balance.  Instilling wholesale changes to an organization that has just been merged or taken over, if not managed correctly, can severely undermine the future vision.  The key is to fully understand, develop, and document what changes need to be made and what the impact to both organizations will be.

                Secondly, a key element to focus on with the opportunity of a merger, is the technology for data collection and management efforts.  The first step is to determine what data both organizations are currently tracking or recording.  Once this is done, the use and importance of that data to each entity can be analyzed for similarities and commonalities.  There must be a plan developed to merge the data into on common system.  Yes, this can become an expensive proposition but if left alone as is, can cause exorbitant amounts of effort translating into lost productivity and increase operating costs.  This is the one single item in merging two companies that can translate into objective business decisions based on factual information.  If that information means different things between the two organizations due to different data processes and systems, business decisions cannot be factually proven out or projected.  Again, this adds uncertainty and ultimately costs to running the business.  This added cost from both entities managing two separate data systems, data processes, and general data management can more than justify added costs even though the initial cost of the merger might have put the whole organization in a tight financial position.  Data collection was a focus topic in my past blog writing, and will be again later next year.

                Merging of two or more businesses merging into one can be a daunting task.  The key to success is in the preplanning, post analysis, and the established future vision for the entire collective organization.  If the goal is to simply get bigger without any clear and thorough thought towards how the larger organization will function, the results can cause catastrophic consequences.  The better the pre-work has been thought through, developed, and documented, the faster a sustainable future can take hold.  Considerations must also be made for the managing data between both merged entities.  This one key element will establish a benchmark at an earlier stage in the new organizations’ growth path from which the health of the new business can be measured.  Nothing comes without a cost, but dong nothing can cost more in the long term.  Empower the staff and employees to assist in this forward strategy could return results which will surprise you with costs which will be manageable.

Stay Well

Scott B.


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