The 4 C’s: Drivers to Unlock Exceptional M&A Value

The 4 C’s: Drivers to Unlock Exceptional M&A Value

A successful construction project requires a set of plans, materials, and, most importantly, skilled and engaged construction workers. Without them, the structure will come tumbling down—regardless of how strong the materials were or how well-planned the building was. Conducting a successful M&A integration is similar.

As explored in our previous post, “The New Drivers to Unlock Exceptional M&A Value,” leaders work hard to achieve critical merger goals and conduct proper due diligence. Yet more than half of all M&A deals actually destroy shareholder value. What’s missing? Usually, it’s a “people thing.” Simply put, employee buy-in can make or break a deal’s ultimate success.

Research shows that 60 to 70 percent of realized deal value comes from “soft factors,” such as strategic alignment, organizational integration and low employee resistance. It’s imperative that businesses do not underestimate the importance of bringing employees along on the change journey mergers and acquisitions represent.

A shared enthusiasm for the future from all stakeholders is essential. In our extensive experience at Gagen MacDonald, we’ve found that focusing on the following four drivers—the 4 C’s—can facilitate successful M&A integration:

  1. Connection – People drive the success or failure of an initiative. Organizations need a team that consists of members who can mediate between leaders and key stakeholders. Individuals need a broad view of business strategy and cross-functional relationships to help drive the process. Strategic change communications should make the connection between corporate interactions/financials and individual purpose. They should also translate the nuts-and-bolts business case into a tangible, emotionally resonant valuable proposition. Objectives should be defined based on what the business needs to achieve as a result of the deal.
  2. Commitment – Executives with prior M&A experience recognize the commitment, time and energy that’s required to attain success. Leaders of all levels may bring content mastery to a transaction, but some might lack the capability or the confidence to lead the organization through significant change. It’s crucial that businesses not only commit to training leaders to be effective change agents, but also to give them the bandwidth and time to see change through to a successful conclusion.
  3. Communication – Eventually, change agents and leaders will need to communicate the new company strategy to the entire organization. Inspirational leadership keeps the momentum of change moving in a positive direction. Therefore, businesses must invest in internal communications so that everyone is committed to the success of the merger—and remains so. This requires patience, trust and an ongoing commitment from leaders.
  4. Culture – The launch of a successful culture initiative begins by understanding each partner’s background. From there, leaders should tap into the best components from each to create a communications plan expressing the singular, new culture to employees, customers and stakeholders. As the structure, systems and organization of the company change, culture must stay in lockstep.

Employees are the cornerstone of a well-constructed business, but a merger can make them feel out of sorts. Incorporating the 4 C’s into your M&A planning process will help you build an integrated company whose employees are in sync and focused on making a solid partnership—an indestructible entity with a value that exceeds all expectations.

Learn how Gagen MacDonald’s proven processes transform M&A integrations.