Why Your Merger is a Battle with Coconuts

Battle for Nothing

Example: get five development teams to agree on one IDE. Or one CI/CD tooling. Or even just one text editor.

You will cause an uproar. Been there. More than once.

It’s still possible with your in-house teams. Try it after a merger.

Almost impossible.

Your M&A activity doesn’t fail due to management. It fails due to resistance from those you want to unite.

Now you have to merge different cultures. And incompatible tool stacks.

Tremendous friction loss.

Re-education? Your teams have other fish to fry.

They shall deliver.

Your carefully planned migration projects?
Take twice as long as planned.
And cost five times as much.

Because your engineers shall deliver.

You hire external consultants. The best your budget allows.

And yet they meet their match.
Because the outside leverage is even smaller.

War of Attrition

The likely scenario: You lose the key players of your new acquisition.

One after another.
Like the Black Knight losing his limbs.

Because they don’t feel like adapting.
Because they feel like losers.

Sounds harsh? It is.

They lose their beloved tool stack. Or even their hard-won position. But worst of all: they have to give up their habits.

They just don’t feel like doing that.

Because they are artists. And experts.

You can tell them what to do.
But not how.
That would be micromanagement.

And you can’t force them into strict processes.
Because they believe that these restrict their artistic freedom. And make them slow.

More often than not, they’re right.

Because poorly designed processes do both.
They distract from creative work.
And slow things down. A lot.

And then people just leave.
They flee your company.

Like Sir Robin fleeing the three-headed foe.

Siege

But things can turn out differently.

They stay. And they cocoon. Resisting the merger by all means.

Which might be worse.

Now you’re the servant of two masters.

Two cultures.
Two tool stacks.
Two customer bases.
Two documentation systems.

Perhaps duplicate certificates.
Perhaps multiple HR systems.
Perhaps even multiple CRMs.

Your dream of synergy vanishes.
Like Sir Lancelot in the mist.

Your merger will never be effective. You run two parallel universes.

This will not work for long.

The worst-case scenario: A few years later, you realise that you are not compatible.

No market acceptance. No cross-selling. Or significantly below expectations.

Then comes the spin-off. With the same people who once joined.

Now they’re leaving. And they’re leaving stronger.

Because they’ve learned how enterprise works. And carefully guarded the customer base in the process.

The only thing you’re left with? A few lost years.

Years in which you could have replicated their product. Only better.

How can you avoid all this?

Reconnaissance

Take a close look at how the ‘newcomers’ work. They are usually smaller.

But successful. That’s why you bought them.

Because they had something your company didn’t have.
The product that was missing from your portfolio.

Maybe they have the more modern tool stack. Probably leaner processes. Which made them faster than you.

But more importantly, their processes may be more human than yours.

With the acquisition, you didn’t just buy a new product. You bought a new perspective.

New ways of thinking. Different tools.

Make good use of this larger pool. Choose carefully.

You can be sure that you won’t find any of this in the due diligence. If you don’t look, not even later.

You have to track it down. A crusade.

Without horses.

Then maybe everyone will win.

Formation

Suddenly, “us” and “them” become one.

Imperceptibly. But sustainably.

Most important: Shared knowledge.

There may be a business intelligence guru on the team.
Or a gifted coach.

Someone who knows process design inside out.
Or who has successfully mastered countless relaunches.

60 policies become 20. The overpriced CRM gets its well-deserved eternal rest.

The multi-platform strategy finally works. Just like that.

Hidden gems emerge.

The one middleware that connects everything.
The one pattern everyone has been looking for.

The test automation that scales. An O(1) algorithm that outpaces the competition.

The list of possibilities is getting long. If you think about it long enough.

A tug-of-war for naming conventions? Almost forgotten.

Endless code style debates? History.

Commit message arguments? Pointless.

Breaking API changes? No way.

Bug reports? Cut in half.

The NPS? Up two points.

Sounds good? Too good to be true.

Dream of Victory

The few reliable studies agree: most corporate mergers fail.

And burn shareholder value. Proven for listed companies. Probably similar for private deals.

There is only disagreement about the exact figures.

Because a merger is a risky adventure. And difficult. And expensive.

The Big Four ‘studies’ tell a different story. A success story.

But their publications are mostly one thing: an advertising brochure for their own services.

Methodologically weak. Pseudoscience at its best.

They vividly depict the dream of victory. Just look for one of them online. I won’t give them a link.

The Holy Grail lies elsewhere.

Their advice for success?

Only a few bull**** points:

• Culture – Indispensable. No matter what it looks like.

• Synergy – ‘The whole is greater than the sum of its parts’.
  The fascinating world of surplusset theory.

• Speed – For sure. What about direction?

• Holistic planning – Whatever ‘holistic’ is supposed to mean here.

• Iron-fisted governance – Control sounds good.
  But what exactly is governance again?

These five things are mutually dependent. As with the hole in the bucket.

In fact, with a similar circular reasoning: ‘Successful people are successful because they say they are successful.’

The bitter truth: the dream of a good merger will probably remain a dream for the time being.

Many companies also dream of having good processes.
Most don’t even dare to dream of having well-managed processes.

Can you even build them?
What matters?
And what does this have to do with fine dining?

Find out in the next article.