A Take-Charge CEO To Spearhead the M&A Process: Front-line CEO leadership, especially during integration, is critical to setting tone and direction so an acquisition pays off for a newly created organization.

Corporate mergers too often continue to disappoint by failing to meet management’s strategic and financial expectations and enhance shareholder value. Scores of problems have been identified, and skilled acquirers have tried to combat them by improving all facets of the m&a process. But a key reason why the casualty list remains high is the persistent failure of CEOs to provide strong leadership while the deal is being done, especially in the critical postmerger integration phase. After spending years assisting companies in acquisition planning and integration and reviewing the wide range of techniques adopted over the last two decades to inject more professionalism into the process, I concluded that the CEOs have frequently dropped the ball. Think of how strategic m&a has changed. Companies have steadily improved their approach to acquisition planning. In addition to their own experiences, they have learned from the scores of books, articles, conferences, and seminars that provide ample best-practices guidance on making mergers work. What’s more, many leading corporations have expertly systematized integration planning and implementation and have shared much of their knowledge with the global business community. The major area that remains behind the times is the CEO’s up-front involvement. Weak leadership is a main contributor to failed corporate combinations. Otherwise well-designed integration programs stumble when there’s poor stewardship by the executive who will oversee the combined company. This is because many senior executives simply don’t realize what’s required of them from an m&a leadership standpoint. The True Role of the CEO Before looking at what CEOs should do, let’s first look at what they shouldn’t do in terms of postmerger integration. It’s not the CEO’s job to run the integration program. It’s not even his or her role to design it; the savvy CEO recognizes the need to entrust integration planning to specialists – either outside advisers or in-house managers with proven expertise in acquisition planning and implementation. It is, however, the CEO’s role to ensure a speedy, successful integration program. It’s the CEO’s job to function as the unequivocal leader who promotes the merged company’s vision and who inspires the organizational unity needed to realize it. Following are five critical success factors that CEOs must attain to lead their companies to m&a success. Quickly Establish the Company’s Vision and Values Any large corporate combination effectively creates a new organization. With any new company must come a new vision – a picture of a desirable future for the company’s employees and stakeholders. Articulating that vision is the CEO’s first leadership task during the integration period. Underlying the new vision are new values. These are the ethical guidelines that help employees understand how to work in the new organization. Values shape people’s behaviors based on the ideals the company holds to be important. Values might relate to such things as customer commitment, product quality, employee diversity, community citizenship, or any number of factors that define the organization’s corporate character. When employees embrace their firm’s values, they embrace its goals. Workers gain a sense of ownership and commitment. Consequently, they are more loyal and show a desire to do their best every day. Their positivism is contagious. It spreads through the combined company, helping to spawn the broad employee buy-in that is so critical to attaining integration objectives. It is the CEO who must articulate the merged company’s values. The CEO must not only define them but he or she must demonstrate them by actively – and visibly – living them on a daily basis. This is critical. Foster and Ensure Information Sharing The postmerger integration process is inherently based on data transfer and knowledge sharing. Unfortunately, integration is a time when communicative cooperation is often nonexistent. New co-workers are naturally leery of each other. There are no bonds between them. There is certainly little or no trust. These factors hinder information flows. It is the CEO’s job to break the communication logjam. The CEO must actively promote the benefits – and the necessity – of information sharing. Why? Because strategic mergers are undertaken to meld two organizations’ complementary capabilities. This can only occur when organizational knowledge flows freely between the combining companies. Data sharing is particularly crucial when cross-selling, joint product development, and cost-reducing process realignments are strategic drivers of the m&a transaction. Only with unimpeded data exchanges can these benefits be realized. Breaking down barriers and building bonds between the new co-workers is one of the CEO’s most crucial leadership challenges. Formal programs must be devised to spark information sharing. The CEO must closely monitor their progress and quickly intervene if those efforts aren’t yielding the desired results. Serve as the Consummate Communicator CEOs must get out and actively serve as the chief proponents of the integration initiative. Too often, I see CEOs remain holed up in their offices without ever venturing out to meet their new employees. These executives feel that just because internal memos and newsletter articles carry their bylines, they are adequately communicating with their new people. They’re not. Written communications are essential but nothing replaces the power of face-to-face interaction. There must be a healthy balance between “non-personal” (e.g., written) and interpersonal communication – with a strong emphasis on the latter. CEOs must take frequent “road trips” to various facilities of the newly combined organization not only to promote the new vision and teamwork but to forge a productive dialogue with all employees. Only then will the acquired workforce feel like a part of the new company. Only then will employees feel that their input and ideas are being heard and acted on. Lead the Leaders Leadership doesn’t mean doing the job all alone. Contemporary organizations, with their flatter hierarchies and empowered workforces, require true leadership at every level. Cultivating and deploying multiple leaders is another urgent task of the CEO. Careful selection of one’s leadership lieutenants is essential. Remember: The leadership skills required in a postmerger context are quite precise and somewhat different than those required in a typical organizational setting. Integration leaders must be adept at negotiating since there invariably will be disputes and friction between new co-workers. Indeed, contentiousness must be expected. These leaders must be cool-headed and flexible, since the high-intensity situations that characterize the integration process often require on-the-spot shifts in tactics. Additionally, the integration leaders must be motivators. They will serve as influential spokespersons in helping to champion the merged firm’s new strategic direction. Leaders are not necessarily born. Most, in fact, are made. It’s the CEO’s job to identify, train, empower, and dispatch loyal, high-potential managers to help achieve integration objectives as swiftly as possible. Actively Forge the Culture Although all of the other tasks are vital, shaping the culture of the combined firm is the most important, overarching leadership role of the CEO as the merging firms come together. To reiterate, totally new organizations are formed in large-scale m&a transactions. When new organizations are formed, new cultures must develop as they take shape. But the culture change isn’t instantaneous. It comes in stages, and the CEO must be on hand for every one of them. Initially, integration requires that dissimilar cultures be aligned. It is only over time that a new culture can be proactively developed. Ensuring that the emergent culture is a high-performance culture – one that’s able to advance the merged company’s long-term objectives – is the central challenge of m&a leadership. Leaders must craft the merged company’s new vision. They must define its underlying mission. They must devise the strategies that will ensure attainment of the mission. And, finally, they must oversee the process of action plan design and execution. Taken together, these initiatives and the foregoing activities lay the groundwork for producing a high-performance culture. Culture creation or modification is the primary responsibility of leaders today. Indeed, everything that the CEO does in supporting the integration process must be undertaken with this in mind. Strong leadership is imperative in any organizational context. It’s particularly crucial in companies being transformed by massive corporate growth or change initiatives. Large-scale mergers and acquisitions pose the proverbial double-whammy! That’s because they represent the most monumental corporate growth and organizational change initiative that any company could ever possibly contend with. The enormous challenges of m&a are well known. Not as well documented are the specific m&a leadership skills that CEOs must demonstrate. Clearly, every corporate combination is different. Thus, each one poses unique leadership challenges. The aforementioned leadership roles are the ones that are most central to achieving m&a success. By all accounts, the integration milieu is characterized by turbulence. The CEO must be the leadership beacon that helps the merged company navigate the choppy waters and reach its strategic destination of enhanced shareholder value.