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Joining Forces: Making One Plus One Equal Three in Mergers, Acquisitions, and Alliances

Book Description

If 75 percent of all mergers fail, what makes the other 25 percent succeed?

Mergers, acquisitions, and alliances are more vital today than ever before in driving business success. This indispensible guide offers proven strategies and sound solutions to the multitude of integration issues that inevitably arise, and shows how to create a combined business that meets its strategic and financial objectives, competes better, and offers personal and organizational enhancements. Dubbed "merger mavens" by Fortune magazine, the authors report lessons learned from their experience in over 100 combinations. Executives, managers, and employees alike—in all industries and sectors—will find useful examples, strategies, and tools here.

Praise for Joining Forces

"This book will help both M&A veterans and those new to the game. The authorsprovide great insights into the human, cultural, organizational, and strategic factors that matter in M&A success."—Richard Kovacevich, chairman and CEO emeritus, Wells Fargo & Co.

"Don't commit to the merger or acquisition without them! I have personally witnessed how hard it is on everyone—employees, shareholders, communities, and especially executives—to work through an improperly managed merger. I have known Marks and Mirvis for almost twenty-five years and the only mistake our organization made was that we did not consult them soon enough. Their new book reflects unequalled experience and intellect. Don't merge, acquire, or be acquired without it!"—Michael R. Losey, CEO (emeritus), Society for Human Resources Management (SHRM)

"Joining Forces is a terrific resource for managers who want to understand thehuman dynamics of mergers and acquisitions, and a must-read for those who have to lead their companies through one. It is based on the latest research and providespractical insights and advice from authors who know M&A inside out." —Edward E. Lawler III, Distinguished Professor of Business, Marshall School ofBusiness, University of Southern California

Table of Contents

  1. Copyright
  2. Preface: Joining Forces
    1. What This Book Is About
    2. What's New in This Edition?
        1. Strategy
        2. Organization
        3. People
        4. Culture
        5. Transition Management
  3. The Authors
  4. I. Creating Value in Mergers, Acquisitions, and Alliances
    1. I. The Elusive Equation
      1. 1.1. M&A Scale and Scope
      2. 1.2. Creating Value
      3. 1.3. Strategy and Synergies
        1. 1.3.1.
          1. 1.3.1.1. Economies and Cost Savings
          2. 1.3.1.2. Resource Combinations
          3. 1.3.1.3. Revenue Enhancement
          4. 1.3.1.4. New Knowledge and Capabilities
        2. 1.3.2. Searching for Synergies
      4. 1.4. Combination Forms
        1. 1.4.1. Combining Organizations and Cultures
        2. 1.4.2. Cultural Fit
      5. 1.5. The Human Side of M&A
        1. 1.5.1. Transition Management
          1. 1.5.1.1. Stages of Change
          2. 1.5.1.2. Psychology of Adaptation
        2. 1.5.2. A Cautionary Tale
          1. 1.5.2.1. Buying Values
          2. 1.5.2.2. Cultural Clash
          3. 1.5.2.3. Learning Together
      6. 1.6. Making One Plus One Equal Three
    2. II. What Goes Wrong and How to Make It Right
      1. 2.1. Combinations Historically and Today
      2. 2.2. Phases of a Combination
        1. 2.2.1. The Precombination Phase
        2. 2.2.2. The Combination Phase
        3. 2.2.3. The Postcombination Phase
      3. 2.3. The Merger Syndrome
        1. 2.3.1. Personal Signs of the Merger Syndrome
        2. 2.3.2. Organizational Signs of the Merger Syndrome
        3. 2.3.3. Cultural Signs of the Merger Syndrome
      4. 2.4. Joining Forces—Best Practices
        1. 2.4.1. Precombination Management
          1. 2.4.1.1. Strategy
          2. 2.4.1.2. Organization
          3. 2.4.1.3. People
          4. 2.4.1.4. Culture
          5. 2.4.1.5. Transition Management
        2. 2.4.2. Combination Management
          1. 2.4.2.1. Strategy
          2. 2.4.2.2. Organization
          3. 2.4.2.3. People
          4. 2.4.2.4. Culture
          5. 2.4.2.5. Transition Management
        3. 2.4.3. Postcombination Management
          1. 2.4.3.1. Strategy
          2. 2.4.3.2. Organization
          3. 2.4.3.3. People
          4. 2.4.3.4. Culture
          5. 2.4.3.5. Transition Management
      5. 2.5. Four Truths About Combination Management
  5. II. The Precombination Phase
    1. III. Strategic and Operational Preparation
      1. 3.1. The Four P's of Preparation
      2. 3.2. A Disciplined Approach to M&A
        1. 3.2.1. Cisco's Five Rules for Acquisitions
          1. 3.2.1.1. Adapting to Changing Circumstances
      3. 3.3. Purpose: Putting Strategy to Work in M&A
        1. 3.3.1. Strategic Intent for M&A
          1. 3.3.1.1. Gut Check
        2. 3.3.2. Clear Search Criteria
          1. 3.3.2.1. Criteria for Health Care Deals
      4. 3.4. Partner: Search and Selection
        1. 3.4.1. Thorough Screening
          1. 3.4.1.1. Diligent Due Diligence
          2. 3.4.1.2. Behavioral and Cultural Due Diligence
          3. 3.4.1.3. Cross-Cultural Surveys
      5. 3.5. Parameters: Defining the Relationship
        1. 3.5.1. The Operating Relationship
          1. 3.5.1.1. Integrating for Synergies
        2. 3.5.2. The End State: Cards Faceup on the Table
      6. 3.6. People: Managing the Human Dealings
        1. 3.6.1. Planning During the Precombination Phase
    2. IV. Psychological Preparation
      1. 4.1. Combination Mind-Sets
        1. 4.1.1. Mind-Set of the Buyer
        2. 4.1.2. Mind-Set of the Acquired
        3. 4.1.3. A Partnering Mind-Set
      2. 4.2. Engaging Minds
        1. 4.2.1. Sensitization Workshops
          1. 4.2.1.1. Role Reversal
      3. 4.3. Human Reactions to a Combination
        1. 4.3.1. What Makes a Combination So Stressful?
          1. 4.3.1.1. Stress Begets More Stress
        2. 4.3.2. Emotional Reactions to M&A
      4. 4.4. Challenges in the Precombination Phase
        1. 4.4.1. Retaining Desired Talent
        2. 4.4.2. Winning "Their" People Over
        3. 4.4.3. Dealing with the Acquired CEO
        4. 4.4.4. Middle Managers' Role
        5. 4.4.5. Managing the Sales Staff
        6. 4.4.6. Connecting to Everyday Employees
      5. 4.5. Preparation on the Seller's Side
        1. 4.5.1. Preparing to Be Acquired
        2. 4.5.2. Preparing People for Divestiture
      6. 4.6. Precombination Phase Action Checklist
  6. III. The Combination Phase
    1. V. Leading the Combination
      1. 5.1. Exemplary Leadership from Both Sides of the Deal
        1. 5.1.1. Preserving an Acquired Company's Culture
        2. 5.1.2. Leading a Transformation
      2. 5.2. Leadership Tasks in the Combination Phase
      3. 5.3. Vision for the Combination
        1. 5.3.1. The Combination Storyline
        2. 5.3.2. Critical Success Factors
      4. 5.4. Principles for the Transition
        1. 5.4.1. Principles for Merging
          1. 5.4.1.1. Rules of Engagement
      5. 5.5. Selecting and Developing the Leadership Team
        1. 5.5.1. Appointments: Before or After the Deal?
          1. 5.5.1.1. Making Appointments as You Go
          2. 5.5.1.2. Profiling and Picking Talent Through Management Ranks
        2. 5.5.2. Senior Team Development
      6. 5.6. Speaking to Employees
        1. 5.6.1. The CEO Address
        2. 5.6.2. Getting Managers Ready for Their Speech
        3. 5.6.3. Rallying the Ranks
      7. 5.7. Speed of Integration
        1. 5.7.1.
          1. 5.7.1.1. Focusing and Prioritizing Executive Attention
    2. VI. Putting Companies Together: The Transition Structure
      1. 6.1. Transition Management Activities
      2. 6.2. Transition Structures
        1. 6.2.1. Components of a Transition Organization
          1. 6.2.1.1. Integration Steering Committee
          2. 6.2.1.2. Transition Managers
          3. 6.2.1.3. Transition Teams
        2. 6.2.2. Transition Structure Benefits
      3. 6.3. Enhancing the Effectiveness of Transition Teams
        1. 6.3.1. Organize the Work
          1. 6.3.1.1. Organize teams around value creation.
          2. 6.3.1.2. Employ a credible and rigorous issue-identification and decision-making process.
          3. 6.3.1.3. Attend to teams' internal processes.
          4. 6.3.1.4. Mind relations with the rest of the organization.
        2. 6.3.2. Select Skilled Transition Team Members and Leaders
        3. 6.3.3. Clarify Team Charters and Guidelines
        4. 6.3.4. Determine Deliverables and Timetables
        5. 6.3.5. Accelerate the Work of Transition Teams
          1. 6.3.5.1. Knowledge Building
          2. 6.3.5.2. Relationship Building
          3. 6.3.5.3. Process Improvement
        6. 6.3.6. Cross-Team Coordination
        7. 6.3.7. Challenge Sessions and Reviews
      4. 6.4. Looking Outside the Box
      5. 6.5. Transition Planning and Implementation
    3. VII. Managing People Through the Transition
      1. 7.1. Combination Stress Versus Commitment
      2. 7.2. Managing Front-End Fears—The Four I's
        1. 7.2.1. Insight
        2. 7.2.2. Inspiration
        3. 7.2.3. Information
        4. 7.2.4. Involvement
      3. 7.3. A Comprehensive Communication Campaign
        1. 7.3.1. Communication Content
        2. 7.3.2. Communication Processes
        3. 7.3.3. Regular Updates
      4. 7.4. Managing Emotions as Companies Combine
        1. 7.4.1. Sensitization and Surfacing
          1. 7.4.1.1. Using "Play" to Surface Merger Issues
          2. 7.4.1.2. Counseling and Support
          3. 7.4.1.3. Walking the Talk
      5. 7.5. Dealing with Staffing and Redundancies
        1. 7.5.1. Staffing Scenarios
        2. 7.5.2. Downsizing
        3. 7.5.3. Maintaining Morale
      6. 7.6. Putting HR Together
        1. 7.6.1. Accelerate Integration
          1. 7.6.1.1. Workforce Reductions
          2. 7.6.1.2. Upward Communication
          3. 7.6.1.3. Total Rewards
          4. 7.6.1.4. People Strategy
        2. 7.6.2. Addressing Identity and Acculturation
    4. VIII. Easing the Clash of Cultures
      1. 8.1. Culture in Combinations
        1. 8.1.1. Why Company Cultures Clash
          1. 8.1.1.1. Stages of Culture Clash
          2. 8.1.1.2. Losing and Winning
          3. 8.1.1.3. Stepford Wives Versus the Hell's Angels
      2. 8.2. Managing Culture Change in a Combination
        1. 8.2.1. Define a Desired Cultural End State
          1. 8.2.1.1. Multiple Modes of Acculturation
        2. 8.2.2. Deepen Cross-Cultural Learning
          1. 8.2.2.1. Culture Clarification Exercises
        3. 8.2.3. Pace the Combination with Cultural Sensitivity
        4. 8.2.4. Drive the Combination Toward the Desired End
          1. 8.2.4.1. Cultural Pluralism: Preserving a Culture
          2. 8.2.4.2. Cultural Integration: Best of Both
          3. 8.2.4.3. Cultural Assimilation: Absorbing a Culture
          4. 8.2.4.4. Cultural Transformation: Building a New Culture
      3. 8.3. Cross-National Culture Clashes
        1. 8.3.1. Managing Culture Clash in International Combinations
      4. 8.4. Combination Phase Action Checklist
  7. IV. The Postcombination Phase
    1. IX. Building the New Organization and Culture
      1. 9.1. Building the Postcombination Organization
        1. 9.1.1. Top-Level Oversight
        2. 9.1.2. Repurposing a Business Unit
      2. 9.2. Building Cross-Functional Relations
        1. 9.2.1. Clarifying Cross-Unit Needs
        2. 9.2.2. Meshing Policies and Practices
      3. 9.3. Culture Building
        1. 9.3.1. Three Culture-Building Scenarios
          1. 9.3.1.1. Keeping the "Old Ways"
          2. 9.3.1.2. Acculturation by Default
          3. 9.3.1.3. Acculturation by Design
        2. 9.3.2. Culture Building in Cross-National Combinations
      4. 9.4. Leverage for Culture Building
        1. 9.4.1. Culture at the Working Level
        2. 9.4.2. Culture Training
      5. 9.5. Branding the Combination
    2. X. Joining People and Teams Together
      1. 10.1. Postcombination Teambuilding
        1. 10.1.1. The Timing of Adaptation
        2. 10.1.2. Building Postcombination Teams
      2. 10.2. Understanding Postcombination Mind-Sets
        1. 10.2.1. Sources of Tension in Building New Teams
      3. 10.3. Molding Individuals into a Team
        1. 10.3.1. Psychological Enlistment: Forming the Team
        2. 10.3.2. Role Development: Team Organization
        3. 10.3.3. Trust and Confidence: Getting Down to Work
      4. 10.4. Developing Effective Postcombination Teams
        1. 10.4.1. A Prescription for Teamwork
          1. 10.4.1.1. Building a Business Team
      5. 10.5. Transforming an Asian Leadership Team
        1. 10.5.1. Unity-in-Diversity
          1. 10.5.1.1. Becoming a Leadership Community
          2. 10.5.1.2. From Teaming to Transformation
    3. XI. Damage Control and Recovery
      1. 11.1. Picking the "Wrong" Executive
        1. 11.1.1.
          1. 11.1.1.1. Damage Control
      2. 11.2. Stuck in Transition
        1. 11.2.1. Getting Unstuck, Moving Forward
        2. 11.2.2. Empathy
        3. 11.2.3. Engagement
        4. 11.2.4. Energy
        5. 11.2.5. Enforcement
      3. 11.3. Redirecting a Combination
        1. 11.3.1. Fast Start: Adopt and Go
        2. 11.3.2. Operational Versus Strategic Integration
        3. 11.3.3. Hurd to the Rescue
      4. 11.4. Listening and Learning
      5. 11.5. Postcombination Phase Action Checklist
  8. V. Building M&A Competence
    1. XII. Tracking and Learning from the Combination
      1. 12.1. Knowing What Is Going On
        1. 12.1.1. Benefits of Combination Tracking
        2. 12.1.2. Resistance to Tracking the Combination
      2. 12.2. How to Track a Combination's Progress and Impact
      3. 12.3. What to Monitor and How to Do It
        1. 12.3.1. The Tracking Process—Gathering Action-Oriented Data
        2. 12.3.2. Guidelines for Tracking the Impact and Progress of a Combination
      4. 12.4. Tracking a Financial Services Combination
        1. 12.4.1. Measurement and Corrective Actions Over Time
          1. 12.4.1.1. Precombination Measurement
          2. 12.4.1.2. Combination Phase Measurement
          3. 12.4.1.3. Postcombination Measurement
      5. 12.5. After-Action Review: A High-Tech Acquisition
        1. 12.5.1. Good Intentions Gone Awry
      6. 12.6. Tracking Customers
    2. XIII. Joining Forces—Building M&A Competency
      1. 13.1. Levels of M&A Competency
        1. 13.1.1. Level 1: Learning ... for Now and for the Future
        2. 13.1.2. Level 2: Building a Core Competency in Combination Management
          1. 13.1.2.1. Mastering the Art and Science of M&A
          2. 13.1.2.2. Gaining Experience Through M&A
        3. 13.1.3. Level 3: Building an Internal M&A Shop
          1. 13.1.3.1. Staffing the M&A Group
          2. 13.1.3.2. Building an In-House M&A Shop
      2. 13.2. Building a Competence in Combination Management
      3. 13.3. Ensuring That People Matter
  9. Endnotes
    1. Preface
    2. Chapter One
    3. Chapter Two
    4. Chapter Three
    5. Chapter Four
    6. Chapter Five
    7. Chapter Six
    8. Chapter Seven
    9. Chapter Eight
    10. Chapter Nine
    11. Chapter Ten
    12. Chapter Eleven
    13. Chapter Twelve
    14. Chapter Thirteen