Nine Deadly Sins 
Nine Deadly Sins
of Merger Failure
To Download this excellent presentation, visit :
To Download this excellent presentation visit :
Nine Deadly Sins 
                    of Merger Failure
                    of Merger Failure

#1. No guiding principles
        #1. No guiding principles
• Merging companies often fail to develop a set of 
  guiding ...
#2. No ground rules
#2. No ground rules
       • Ground rules for planning 
                           p      g
#3. Not sweating the details
     #3. Not sweating the details
• Detailed post‐close transition 
  plans can be lacking ev...
#4. Poor stakeholder outreach
#4. Poor stakeholder outreach
             • All relevant stakeholder groups—
#5. Overly conservative targets
  #5. Overly conservative targets
• Management must set aggressive 
         g            ...
#6. Integration plan not explicitly in 
           the financials
             h f       l

              • Merging compan...
#7. Cultural disconnect
        #7. Cultural disconnect
• Culture change management is not indulgent; it is a 
  critical ...
#8. Keeping information too close
 #8. Keeping information too close
• There is a natural hesitancy to 
     e e s a atu a...
#9. Allowing the wrong changes to 
             the plan
              h l
             • The popular trend toward 
Picture source
                          Picture source‐‐content/uploads/2007/12/merge...
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Merger Failure : Nine Deadly Sins


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Unfortunately things do not always go smooth in the execution of mergers and acquisitions and sometimes it is a complete failure. Check out why it fails

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Merger Failure : Nine Deadly Sins

  1. 1. Nine Deadly Sins  Nine Deadly Sins of Merger Failure
  2. 2. To Download this excellent presentation, visit : To Download this excellent presentation visit : http://Strategy‐ Nine Deadly sin of merger failure is article by Gerald Adolph, Karla Elrod, and J. Neely.  Harvard Business Review 
  3. 3. Nine Deadly Sins  of Merger Failure of Merger Failure No guiding  principles Keeping  information too  No ground rules close Allowing the  Integration plan not  wrong changes to  explicitly in the  the plan the plan financials Cultural  Not sweating  disconnect the details Overly conservative  Poor stakeholder  targets outreach
  4. 4. #1. No guiding principles #1. No guiding principles • Merging companies often fail to develop a set of  guiding principles linked to the merger's strategic  intent.  • Perfection may not be possible, but these principles Perfection may not be possible, but these principles  will assure that all decisions drive the combined entity  in the same direction. 
  5. 5. #2. No ground rules #2. No ground rules • Ground rules for planning  p g provide nuts‐and‐bolts  guidance for how the  planning teams should act as  planning teams should act as they begin to put the face of  the merged entity on paper.  • These rules should include  processes for how decisions  are to be made and how  are to be made and how conflicts should be resolved.
  6. 6. #3. Not sweating the details #3. Not sweating the details • Detailed post‐close transition  plans can be lacking even  when two companies are  working hard and have top‐ g p level leadership closely  engaged.  • The acquirer may be The acquirer may be  suffering from acquisition  fatigue, management  distraction, a reluctance to  distraction a reluctance to share information, or a  simple unwillingness to  follow a methodical decision  follow a methodical decision timeline. 
  7. 7. #4. Poor stakeholder outreach #4. Poor stakeholder outreach • All relevant stakeholder groups— both internal and external—must  receive communication about the  transaction, early and often.  • While employees, customers, and  regulators get the bulk of the  regulators get the bulk of the attention, there is a long list of  additional stakeholders such as  communities, suppliers, and the like  who also need care and feeding.  h l d df d • Management must strive to  understand how these groups view  the deal and how they might react  the deal and how they might react to changes such as new pricing, the  elimination of vendors, and  adjustments in service and  personnel.l
  8. 8. #5. Overly conservative targets #5. Overly conservative targets • Management must set aggressive  g gg targets from the start.  • This helps reinforce and clarify the  transaction's guiding principles and  transaction's guiding principles and strategic intent, specifically, how  hard the integration teams need to  push for cost savings and revenue  growth.  • Build your targets with some Build your targets with some  stretch and expect that your people  will find a way to get there.
  9. 9. #6. Integration plan not explicitly in  the financials h f l • Merging companies build  detailed integration plans  only to stop short of driving  l h fd them into the combined  entity s operating financials entity's operating financials  in a clearly identifiable  manner.  • Whil th i t While the integration plan  ti l will evolve, you need to  create financial benchmarks  that can be tracked.
  10. 10. #7. Cultural disconnect #7. Cultural disconnect • Culture change management is not indulgent; it is a  critical aspect of any transaction.  critical aspect of any transaction • Management must set a vision, align leadership around  it, and hold substantive events to give employees a  chance to participate.  chance to participate • Detailed actions and well articulated expectations of  behavior connect the culture plan to the business goals.
  11. 11. #8. Keeping information too close #8. Keeping information too close • There is a natural hesitancy to  e e s a atu a es ta cy to share information, and current  regulations put pressure on what  management can tell the  ll h organization without going to  public disclosure.  public disclosure • Tell employees what you can.  Also, tell them what you can t tell  Also, tell them what you can't tell them at the moment, why, and  when you will be able to do so.
  12. 12. #9. Allowing the wrong changes to  the plan h l • The popular trend toward  empowered line managers and  decentralization carries the risk  of handing off carefully  g y designed plans to new decision  makers who are not steeped in  the balances and considerations  that made the plan viable in the  first place.  • Following handoff every Following handoff, every  company needs clear decision  rights about who can change  the agreed upon plans, under  the agreed‐upon plans under what circumstances, and with  what approvals.
  13. 13. Picture source Picture source‐‐content/uploads/2007/12/merger.jpg‐content/uploads/2009/05/5_merger.jpg‐content/uploads/merger.jpg http://www srccomp com/images/FinanceGraphic jpg‐content/uploads/2008/08/top‐secret‐rubber‐ink‐ p p p p p p stamp‐thumb157221.jpg‐content/uploads/2009/05/financial‐target.jpg‐OBOD/merger1.gif