Palgrave Macmillan, 2006
David Fubini, Colin Price, and Maurizio Zollo
Mergers that appear to be successful – by meeting synergy targets and achieving financial goals – can often be harmful to the company in the longer run.
A truly healthy merger results in improvements across multiple dimensions, including operating and financial performance, business and technical capabilities, strength of stakeholder relationships, corporate culture, pace and focus of learning, and ability to renew and enhance strategy.
This book by David Fubini, Colin Price and Maurizio Zollo argues that CEOs and other senior managers need to focus greater attention on defining and performing their own leadership role in a merger. It’s no longer sufficient for those at the top to view their own job largely in terms of avoiding disaster and its attendant bad publicity, to assume that integration is a technical challenge that can be delegated away, or to be daunted by the many dimensions of the merger exercise, some of them intangible.
Based on interviews with almost 30 CEO ‘veterans’ of the merger arena– and an in-depth analysis of 167 post-merger management engagements completed by McKinsey across all industries and in all countries between 1996 and 2001 – the authors have identified five key leadership challenges:
1. Create a new top team before the close of the merger and make it the ultimate template for the integration, embodying every characteristic that is crucial for the success of the merged company
2. Ensure that the merger communications is set in the context of the broader corporate story – what the company means for its stakeholders groups, and how they interpret its past and present and anticipate its future
3. Focus effort on a ‘performance culture’, that is to say the crucial set of attitudes and behaviors that are required to create value in the merged company
4. Identify those external stakeholder groups where the value at stake is significant and to become their active champion
5. Identify the need for, and to undertake. integration-critical learning challenges and ensure that in the process the company learns about itself.
Where any one of these leadership challenges is fully embraced – particularly the first one about creating the new company at the top – the goal of a healthy merger will become less elusive.
