M&A success? It's all about the people.

M&A activity can bring a range of benefits to businesses, including increased market share, cost savings, and access to new technologies and markets. However, the success of an M&A transaction is not solely determined by the financial and strategic considerations that go into the deal, as comparatively straightforward as that may be. Engaging employees in M&A activity is critical to ensure a smooth transition and reap the full benefits of the deal.

Employee engagement is the emotional commitment an employee has to the organisation and its goals. When employees feel engaged, they are more likely to be productive, innovative, and committed to the organization's success. Engaged employees are also more likely to stay with the company for longer and contribute more valuably to its long-term growth. This is particularly important during an M&A transaction, as the success of the deal relies on the ability to retain key talent and maintain productivity during the transition.

On a recent roundtable I attended, a key talking point was the fact that 60% of leaders who had experienced failed M&A activity rested that failing solely on the shoulders of the businesses’ inaction with employees.

Involving employees in the M&A process should build trust, reduce anxiety, and create a sense of ownership and commitment to the new organisation.

It’s also worth remembering that the inside story may not be the key selling point to employees. The entire team doesn’t need to see all the graphs the board and the due diligence team worked on, they want to know what it means for them. A worried Service Desk Manager may not have the share price at the top of their list of priorities: they want to know if Christmas and holidays are still on the cards.

Employees can provide valuable insights into the culture, operations, and strengths and weaknesses of their respective organisations. This information can be used to identify areas of alignment and potential challenges, and to develop strategies to mitigate these risks.

Engaging employees in M&A activity will help to identify and retain key talent. During an M&A transaction, there is always a risk of losing valuable employees who feel uncertain about their future with the company, and, more often than not, the best performers are the first to resign. By involving employees in the process, leaders can communicate their commitment to retaining key talent and provide opportunities for employees to contribute to the success of the deal.

And if that opportunity isn’t there? Say so. Being honest and transparent in communications, even when it’s not good news, is critical. The backlash from promising the team that “we’re all in this together”, then walking half of them out of the door the following week will be ten times worse than a CEO’s discomfort in letting them know not everyone will be part of the company’s future.

Engaging employees in the M&A process can help to facilitate cultural integration. M&A transactions often involve bringing together two organisations with different cultures and ways of working. Engaging employees from both organisations in the process can help to bridge these cultural differences and create a shared vision and sense of purpose for the new organisation.

Establishing a new narrative, one which is more inclusive and acknowledges the emotional weight on employees, with overt focus on opportunity and growth for the individual and organisation, is the route to success.

Doing this quickly, with an eye on the change curve, will help. To get integration done and successfully transition to BAU, the activity should be treated like any other commercial project and be adequately resourced and costed. Carve out a team and give them space in their minds and calendar to be effective.

In short, engaging employees in M&A activity is critical to the success of the deal. The worst case is that a leadership team doesn’t keep the key people on board, some wheels stop turning, and the companies that everyone is working so hard to merge begin to lose value, teams break apart, and the venture fails.

By involving employees in the M&A process, organisations can create a sense of ownership and commitment to the new vision and set the foundation for long-term growth and success.