Over the three-plus decades of running a brand and marketing firm, I’ve been involved in at least 20 significant mergers and acquisitions. In some, I was deeply immersed leading up to the event, others I was involved in strategic work after the deal was announced. But I had a front seat for most of them, from beginning to ultimate resolution.
Less than a third of those deals witnessed over that time qualified as raging successes. They delivered on a promised1+1=3strategy. They offered immediate value to customers and shareholders, then multiplied that integrated value moving forward. The other deals—a majority of them— ranged from “mostly passable” to “eventually salvaged” to “truly disastrous.”
So, what separated the winning deals from the rest? They were all high-stakes transactions, usually involving hundreds of millions of dollars. Company fortunes, executive reputations and people’s careers were always on the line. People cared about these deals. They were paying attention. But most under-delivered in ways that mattered.
Looking back at the winning deals, I have a theory.
The responsibility of evaluating, pricing and closing deals almost always falls to incredibly smart people with strong analytical skills. They can see around corners and determine the long-term financial viability of integrating two organizations—or the adding acquires assets from one portfolio to another. They’re also typically aware that communicating the vision and strategy behind the deal to employees, customers and prospects isn’t in their wheelhouse. So, a team or committee is formed that’s typically guided by senior leaders from marketing or human resources.
This integration committee will then do a thorough job of understanding the cultures, products and customers. They’ll develop a short-term and long-term brand plan and develop messaging for each key audience—employes, customers, prospective customers, channel partners, investors, analysts and media. Employees and customers especially will be targeted with messages that say something like, “everything you love about the old company or brand will remain the same…your experience, your career, your satisfaction or your outcomes will only be enhanced.”
Money is spent, strategies are followed and schedules are maintained. But, too often, integration efforts sputter or fall flat because lots of well-intentioned people are working diligently on activities that are defensible or even logical. But they are not exerting that effort on a prioritized set of goals and objectives that move the organization forward on the intended trajectory. In other words, the organization becomes staffed by hardworking Sisyphuses pushing hard towards what they think is the mountaintop.
After a deal is closed, there are innumerable paths forward for the newly combined entity or portfolio, many of which can be defended. But while they might be logical or even profitable in the short run, they fail to move the organization forward on the chosen path. In fact, without precise guidance and a clear vision, employees—often with noble intentions—can be expected to go racing in the wrong direction.
Employees—as well as channel partners and other key organizational audiences—need a singular “North Star” strategy to guide their work. They need a credible and compelling narrative that they can internalize, buy into and execute. That strategy needs to be intelligent and inspiring. It needs to make people who might be nervous about a M&A deal think, “I see why they did this.”
In every M&A deal I’ve seen meet or exceed expectations, this North Star strategy comes from one source—the CEO.
People don’t put faith in PowerPoint presentations or FAQs. They don’t admire committees. And they don’t internalize rambling or generic strategies. They follow leaders and they embrace compelling narratives. They want to hear a concise articulation about why a deal was conducted, where the organization is now heading and what they can do to help. They need to hear this story from someone who exudes the authority to choose a strategy and demonstrates the leadership to forge it into a reality.
We Internalize Stories, Not PowerPoints and FAQs
The notion that people absorb, remember and act on stories is real. A compliation of results from multiple psychological studies shows that we’re more than 20x likely to retain a story than even the most compelling individual facts.
That’s why the idea of presenting a North Star strategy a “story” is critical. We are wired to learn from storytelling. From parable to podcasts, our brains are conditioned to consume stories, amass knowledge, form beliefs and share the resulting passion with others. Also we trust and empathize with individuals far more than collective entities, like companies, brands or committees. So, a North Star strategy—even if it is composed and refined by multipole people—needs to come from one person.
A clear and compelling North Star story allows employees to pull in the same direction and avoid wasting time on logical, but irrelevant business activities. It also helps defuse the inevitable turf wars that develop when two cultures come together. Think of any merger or acquisition you’ve witnesses. Each organization will have its own entrenched ways of innovating, selling, communicating and collaborating. It’s easier for people to reconcile these differences and make productive decisions when they know where they and their new co-workers are expected to drive the business.
The story needs to be introduced with a first-person narrative that describes everything that went into the deal. What forces are changing the markets? What strengths have positioned each company for success to this point? What unique value does the new organization bring to the market? Why is it exciting? Why does it matter? What’s in it for those who contribute?
The language used to tell the story needs to be clear and conversational. No truths can be stretched. It’s important to be honest and realistic about things like timelines, innovation roadmaps and revenue potential. The story also needs to clearly describe which contributions are considered valuable—and which ones, even though they might seem logical, are counterproductive.
Employees, partners and other audiences also need to be able to reference the particulars of the story whenever they need guidance. This means creating a document—electronic or printed that becomes a touchstone for the people charged with executing on the strategy. Also, key points need to be illustrated—after all, seeing comes before knowing for all of us.
The other critical consideration is frequency. Invariably, strategies evolve over time. Generally, the core concepts remain in place. But competitors, customers and government regulators will always take actions that require adjustments. So, it’s essential to update the story on a monthly or quarterly basis. This can take the form of a podcast, townhall, Zoom meeting or document update. But, it’s important that the updates continue to come from the same individual—probably the CEO— who initiated the story.
I’m convinced this North Star approach works. The key is remembering that the people you’re counting on to make an M&A deal work are just that—people. A vast majority of them want to help. They want the new combined entity to succeed. You just have to immerse them in the story so they know what do to.
Interested in exploring a North Star strategy and applying it to your M&A deal? Let’s talk.
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