"Indeed, companies spend more than $2 trillion on acquisitions every year. Yet study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%." Harvard Business Review
2013 has proven to be quite the year for re-evaluation and assessment of where current business stands. Whether it is a part of a growth or exit strategy, many entrepreneurs, CEOs and executives have had the conversation "what do we do next" and the concept of a merger or acquisition most certainly crosses the minds of most. But, are you ready for it?
It is common knowledge to recognize the importance of the legal and financial aspects of a merger or acquisition but few consider the third piece of this puzzle, the people. If your business value is based on the output of the knowledge, talent and skills of your people for its success then this third leg of the M&A stool has to be not only considered but needs to be a major focus of your efforts.
People and Culture. This is the third leg of the M&A stool that wasn't factored into industrial age acquisition plans for M&A advisory firms. The result is the 70-90% M&A failure rate of the 21st century. The reality is, in 2014 and beyond, the knowledge economy is a very different beast and requires a savvy and wise approach to the entire M&A process, a fundamental shift in how mergers and acquisitions have been done in the past.
Here are five things to consider assuming the finance and legal aspects have been addressed:
In the end, successful mergers and acquisitions need solid legal and financial advice but they ALSO need a strong (and real) evaluation of your people and culture to be a part of the 30%. Best of luck!
Amy Riccardi is the Chief People Officer and Founder of HCM2020. She's a guest lecturer at Georgetown and George Washington Universities and works with executive teams and CEOs to help scale and grow their business.