80% of mergers & acquisitions fail. 5 things to do to make sure your merger succeed.

A KPMG study revealed that 83% of all mergers & acquisitions (M&A’s) failed to produce any benefit for the shareholders and over half actually destroyed value".
What is the reason why most mergers fail? My observation: Because the intelligences needed to design and construct a merger, differ vastly from the intelligences needed to make it work. The highly skilled people who think up and design these mergers do not necessarily have the second skill set to make it work.
Mergers fail not because of bad business plans but because of the inability to handle the people issues: Interviews in the KPMG study of over 100 senior executives involved in these 700 deals over a two-year period revealed that the overwhelming cause for failure "is the people and the cultural differences". A report from the Economist Intelligence Unit titled M&A Beyond Borders: Opportunities and Risk reveals that Organisational culture differences and human capital integration issues ranked as the two most significant challenges faced by respondents in recent transactions.
But let’s rather focus on the positive: The reason some mergers succeed, is because those involved have (and apply!) intelligences that the others don’t have. Let’s give it an umbrella name: “Merger Intelligence”. The good news is: The intelligences involved in ‘Merger Intelligence” can be acquired and learned by all involved in the merger.
Make a success of the following 5 merger tasks, and your will have a great chance of success:
1. A good TRANSACTION (A good business case and well structured deal)
2. Successful TRANSFORMATION (Successful restructuring and repositioning: Well designed new systems, policies, procedures and good decisions about leadership positions and staffing).
3. Smooth TRANSITION (A well designed process to facilitate transition: The emotional processes people go through to come to terms with the new situation. Their feet are in the new situation but their heads and hearts must follow.)
4. Capable INTERACTION (The ability to deal with different people and the different angles resulting from different corporate cultures).
5. New CORPORATE CULTURE CREATION (Ongoing process where you know how to create the new corporate culture, that will create the bottom line.

You need a lot of logical mathematical intelligence to structure a merger, but the intelligences needed to make it work is Diversity Intelligence (DQ) and also Emotional and Leadership intelligence (EQ and LQ). Diversity intelligence: to be able to interact well with people who differ from you - the ability to enjoy and employ diversity to work for you. Emotional intelligence: to be able to handle your own emotions in the change process. Leadership intelligence: to be able to read the inner motivations of your followers and steer that energy in the intended direction. It is to be able to lead your people into the promised land – the vision and reason why the owners decided on the merger in the first place.

There are well designed interventions available to assist you in this, and to empower you to use these intelligences. Feel free have a look at our Diversity Intelligence website www.diviin.com and to contact me directly at drgous@iafrica.com to open a conversation.
Looking forward to hearing from you. Gustav Gous