How to handle the Effects of a Merger?

“You can’t get anywhere in life without taking risks.”

Above quote is no different from what we have been told for years whenever anyone wants to commence any form of business. But, the impact of prevailing truth becomes more powerful when prominent people come up with words to motivate people.

These above lines in quote marks are well said by Esme Bianco. Until businesses are ready for taking risks, they can’t expect success. It makes their organizations prone to various uncertainties. Therefore, companies take risks to achieve desired business targets. In order to take business ahead, business leaders make ‘changes or adjustments’ to their business.

What a business can ever face as a destiny-defining change?

One of the major changes that may ever happen to any business is — buying or merging with another company. Basically, it’s called “mergers and acquisitions” (M&A) or “consolidations”. Acquisition happens when one business acquires another, and merger or consolidation is all about two businesses are becoming a single entity. There could be multiple reasons for it.

Sometimes, companies shake hands for the merger to control market share and eliminate the competition. On the other hand, one business acquires another to save money. For example, instead of commencing a completely new business and figure out how to sell something new, it might be a profitable deal in acquiring a business with expertise in that space.

Side Effects

Ultimately, after an acquisition or merger, the new company is usually in a better position. But, that is often not the case for many employees who belong to both the companies. If two businesses get combined, layoffs often happen. Why does it happen? For example, the freshly established company won’t be looking for two CEOs, two HR departments, two accounting teams. At some point, the newly formed company might cut back the workforce so that they can save money.

Regrettably, employees can’t control their fates if their employer have decided to lay them off following a merger or acquisition. But, employers can let their employees (survived, new and redundant) feel relived or control the negative aspects if they try to do so. The subsequent points would highlight three major negative situations and the solutions to overcome from them with efforts done by an employer:

How to handle the most Challenging Situations after an M&A?

Condition A — Employees who lose their jobs after an M&A deal find themselves in a really difficult time. Maybe for some of them it proves to be finding a better opportunity, but, for some it becomes a challenging and stressful situation.

Here, the major responsibility of the company is informing employees in advance of the possibility of workforce reductions and give some time to search new jobs.

Condition B— The survived employees find themselves in an unfamiliar territory post the deal. Probably, it becomes difficult for some of the employees to work with new coworkers. The reason largely depends on the communication gap between the new coworkers and the survived employees. Also, the communication gap between the new management and survived employees creates the situation awkward after M&A. Poor communication becomes the evil here.

Companies can get over this situation well with multiple individual and group sessions organized to provide ample opportunity to everyone to communicate with management and coworkers.

Condition D— When employees are apprehensive about their job security they are more likely to become competitive with others. It can result in internal conflicts among employees.

It is crucial for HR professionals and managers to be attentive to handle negative competition. They must ensure that employees receive information regarding the impact of M&A on their jobs and their future with the company. Healthy competition is good, but the company must not overlook the competitions which create tensions and conflicts in the organization.

There could be more situations for the businesses which have multiple negativities involved post an M&A deal. Dealing with each of the issues requires different approach. But, the first and foremost responsibility of employers is to think about their employees in whatever action they take. Organizations can avoid conflicts, tensions and miscommunications through taking precautions before stepping into any M&A.

The soul of dealing with post M&A issues are firstly taking precautions before any merger or acquisitions, and secondly thinking about the employees.

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