Merger season in the professions is still in full swing. Everywhere you look there is another article reporting a firm merging or acquiring practice or rumours that a firm is likely to merge. The question is how do you make sure that you thrive as a result of a merger? In this article we look at what happens organisationally during the merger and therefore, what you need to do to protect your career and thrive.
Why do firms merge or acquire other firms?
Typically most firms merge or acquire another firm for one of these reasons:
- The partners of one firm don’t have a succession plan, so merging with another firm or being acquired becomes their succession plan
- It can give the firms economies of scale whilst reducing overall fixed costs, e.g. reduction in overall headcount for the business support departments
- The newly merged firm will have a greater presence, and therefore a more commercially valuable presence. This could be due to a larger geographical presence or greater market share for a sector or technical specialism.
- One of the firms wants to ‘buy’ the other firm’s IP or ‘goodwill’, e.g. methodology, technology, brand awareness.
- A firm sees an opportunity to ‘buy’ the talent or client base of an ailing firm. Of course this is normally an acquisition but euphemistically terms a ‘merger’
- It gives a firm the opportunity to get rid of some staff and partners under the guise of the ‘merger’
- The firms believe they will be ‘more profitable’ or ‘more sustainable’ if they become bigger by merging.
So, what can you expect as a result of a merger or acquisition
There will be a dominant firm in the merger
Typically, even though it may be a merger of equals, there will be one firm which is dominant during the post the merger. Often this may be the firm which is bigger or is the one which is acquiring the other firm.
The atmosphere and culture will be very unsettling for a while
When you put two firms together everything changes and until strong leadership prevails on the way forward it can feel very unsettling. Until the new normal asserts itself, the firm can often feel in turmoil. E.g. What’s our strategy going forward? What are the firm’s priorities? Who now reports into who? Which process or system from which firm will we use?
People, particularly partners and senior support staff, will leave whether forcibly or on their own terms
Regardless of the initial communications that claim that no jobs will be lost as a result of the merger or acquisition, you should expect that people will leave. Be aware that recruiters and other firms may take an unhealthy interest in individuals or high performing teams with a view to lure them away to another firm. They will leave for a variety of reasons:
- They are made redundant. This is most likely to occur in the business support departments or underperforming client facing teams. This is most likely to happen 6-24 months after the merger has taken place.
- They are compromised out of the business as their position has become untenable as a result of the organisational change. This sometimes happens to partners who don’t want the merger or acquisition to take place. Or key individuals in the ‘weaker’ of the firms merging may find that there is no position for them in the new firm and they are asked to leave. This typically happens fairly early on in the merger process.
- Under the guise of the merger or acquisition the firm asks low performing or “less valuable” individuals to leave. E.g. “we don’t need two business development directors, and there isn’t a role for you. This can often happen very early on in the merger.
- Individuals don’t like what the new firm has become OR get disillusioned with the organisational turmoil post merger and vote with their feet.
What can you do to thrive post merger?
- Take stock of your career to-date. A merger or firm acquisition throws up all sorts of opportunities. Career paths may suddenly open up, or close down. Given that everything you know about the firm you work for may be about to change, it’s time to put you and your career first for a bit. It’s time to brush up your CV, speak to some recruiters and see what opportunities there may be outside of the firm as well as inside the firm.
- Get used to uncertainty. Until a ‘new normal’ asserts itself, uncertainty will rife in your firm. ‘Settling in’ is not an option. The new culture and new ways of working will only become apparent in time. Expect at least 12 months of uncertainty.
- Know the value you bring in your role. Whilst you may not be expected to formally pitch for your current role or a future role in the firm, it pays to be very aware of the value you bring to your firm both now and in the future merged firm. As a result of the organisational change you will be meeting people you’ve not worked with before. They will want to know what you bring to the party and whether you are a ‘player’. With an enlarged firm there will be more people who could put you on their assignments, cases or projects. They need to know that you are a great person to work with. Of course, there is a more sinister side to this. As time goes on, there is a greater likelihood that HR may be required to ‘right-size’ some teams and departments. The more valuable you appear to the senior members of the team, the greater the chance that you will survive any post-merger culls.
- Do your homework on the other firm. As the saying goes, it pays to be prepared. The actual merger will take time to go through. It will become fairly obvious which firm’s processes, people, values and strategies will dominate. Of course, this could vary on a department by department basis. If you can identify what your part of the firm may be taking on from the other firm, e.g. outsourcing of accounts prep, then make sure you build your knowledge on this area. Having some knowledge about the other side and what they will bring to the party will help you go a long way.
- Be present & extend your network into the other firm. With so much uncertainty going on, it can be tempting to put your head down and get on with the work on your desk. This is not the time to hide away. You need to be seen and actively building your networks within the new firm.
- Get good at interrupting what is going on at an organisational level. Mergers and acquisitions are a stressful time for everyone concerned. Whilst I am not advocating listening into the internal grapevine, do keep your eyes and ears out for clues about what is going on at an organisational level. E.g. a long-term under-utilised team will mean that redundancies will be on their way. The better you can read what is going on around you, the easier it will be to be prepared for what may happen to you.