Mergers and acquisitions (M&A) have become a common strategy for businesses looking to grow or expand their market share. However, M&A deals are complex transactions that involve much more than just financial considerations. The human factors of M&A, such as culture clashes, leadership changes, and employee morale, are often overlooked but can have a significant impact on the success or failure of the deal.
According to a Harvard Business Review report, up to 90% of M&A deals fail to deliver the intended value. This is often due to the failure to address the human factors of the transaction. In most cases, M&A advisors focus solely on the financial aspects of the deal and neglect the importance of understanding the people and culture involved.
One of the reasons for this neglect is the lack of experience of M&A advisors. Many M&A advisors have only worked in investment banking and have no experience working outside the finance industry. This narrow experience can lead to a lack of understanding of the complexities of human factors involved in M&A deals.
When advisors do not understand the human factors of M&A, it can lead to poor integration of cultures, ineffective communication, and a lack of empathy towards employees who are experiencing significant changes. These factors can lead to a decline in employee morale, increased staff turnover, and ultimately, a failed acquisition.
To address this issue, M&A advisors must broaden their experience beyond just finance. They need to understand the importance of culture and people in M&A deals and be able to develop strategies that address the human factors involved. This includes understanding the values and beliefs of each organization, developing effective communication channels, and creating a plan for employee retention and engagement.
In conclusion, the human factors of M&A are critical to the success of any deal. Failure to address these factors can lead to significant challenges and ultimately, a failed acquisition. M&A advisors must broaden their experience beyond investment banking and develop an understanding of the complexities of human factors involved in these transactions. By doing so, they can help their clients create successful, unified entities that deliver value to all stakeholders.