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Merger & Akquisition

Due Diligence – Signing – Closing - and now?

We're talking astonishingly little about internal and external resistance when it comes to M & A, but a failed post-merger phase is probably the # 1 cause for failed M & A's.

With mergers and acquisitions (Mergers & Acquisition), the company aims to expand its market position and optimize its cost position in order to counteract the growing cost pressure. The hope for synergies has become the engine of mergers and acquisitions.
Depending on which study is used, the rate of failed mergers & acquisitions is 50-85%. (Source: https://www.cbsnews.com/news/why-mergers-fail/)
There is much philosophizing about the causes of failure. Surprisingly, the most obvious cause is rarely discussed: internal and external resistance.
Every purchase process has a buyer and a purchased one. The employees of the purchased but usually feel like the "sold". The companies and cultures may be outwardly similar, but the differences can be big and fatal in their impact. What works in one corporate culture can sometimes be the trigger for strong internal resistance in the other corporate culture.
And the management? The phase from idea to merger & acquisition to signing takes between 0.5 and 1 year. Especially the last phase is extremely demanding for the management of the company to be bought: the documentation for the due diligence data room must be compiled, but please without any employee suspecting what is going on. Failure to maintain secrecy here is the loss of valuable employee resources. The best ones go first. Of course, day-to-day business continues on the side. The result: at the time of the closing, the management is exhausted and has to work up what is left. Not the best starting point to master the most important phase of the M & A process: the communication phase.
The information of the customers, the suppliers as well as the employees has to be planned meticulously. Any thoughtless sentence, any formulation that has always been used can bring people into opposition. Usually this remains unnoticed at first for all evil. If then the cooperation in the newly created "unity" does not work, it is usually too late to counter.
We strongly recommend that experienced managers be provided with support to the management of the purchased company as early as during the due diligence phase. The cultural differences between the two companies are explored within the framework of a normal management consultancy and taken into account in the communication concept. The preparation of the due diligence documentation becomes better, the mental stability of the management gets better and the preparation for the  publication becomes perfect.