Employment | Private Equity | Retail Financial Services
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The driver for many Private Equity bolt-on acquisitions is the benefit that comes from post-acquisition integration, with the aim of realising synergies to expand market share, increase profits and gain a competitive advantage. This all looks great on paper, but integration can present several challenges, particularly when integrating culture and staff. Integrating two businesses can be a complex process that requires careful planning and execution, including an understanding of the different cultures, values and norms that exist within each organisation. Cultural differences can cause tension and conflict when two organisations come together and can create a sense of uncertainty and instability among employees. If a business hasn't done its due diligence on an organisation's culture and people, the fall-out from this can be enough to derail the best planned integration process.
From the outset, it's important for both companies to recognise and acknowledge these differences and work together to create a unified culture that reflects the best of both organisations. In doing this, your people will feel like they are part of the journey towards a bigger and better combined business and will be invested in the process.
As part of your acquisition strategy, it's important to have clear aims and objectives and an understanding of how you will achieve these so expectations and communications can be managed consistently from the outset. For example, if there is already a need to streamline resources and manage the business in a more cost-effective way, it may be better to do this as a separate exercise prior to any integration to minimise the risk further down the line. You need to consider how and when you will inform and consult with employees and ensure that your operational timeline is aligned with your legal information and consultation requirements. It's also important to work with both businesses to plan your new organisational structure and to map your proposals so that you fully understand the implications of integration for your business and people, enabling you to consider commercial and practical ways to navigate potential legal risk.
It is important for both organisations to engage in open and transparent communication. This can involve sharing information about each company’s history, mission, values, and goals, as well as discussing the challenges and opportunities that may come with the integration. Leaders from both organisations should work together to identify and address any cultural differences that may exist and develop strategies for bridging those differences. You should aim to have your strategy pinned down even before completion of the acquisition so that you can make sure that you're managing communications consistently from day one.
Integrating your people is likely to be a complex process that could lead to changes to people's roles and reporting lines. It's important to take the time to assess the strengths and weaknesses of each team, and to identify areas where the teams can work together to achieve common goals.
One of the biggest risks of staff integration is that key employees may feel vulnerable and leave the organisation. This can be especially true if the two businesses have vastly different cultures, and employees do not feel that they fit into the new organisation or have a shared vision. To mitigate this risk, it is important for leaders to communicate clearly with employees, so they feel part of the vision for the new organisation, and to provide opportunities for employees to be involved in the integration process. Leaders should also recognise and reward employees who demonstrate a willingness to adapt to the new organisation.
We also offer a Management development training programme, designed to bring about real change in the business by addressing the challenges of differences in culture as well as linking strategic direction, internal processes, good practice and collaboration. Please contact our team for more information.
For more information on post-acquisition integration, please see our dedicated page.