How to Survive a Corporate Merger
Here are some guidelines that will help. They are primarily for managers and employees of the subordinate company but useful to those who are at the company setting the rules. "Their lives are going to change, too," says Peg Neuhauser, a management consultant based in Austin. "They have to interact with different people. Everybody has a lower flash point during mergers. As a result, there are not just tribal wars between companies. Old tribal wars within the pre-existing companies break out again as well."
1. Learn the new culture.
But even before you do that, understand your own culture. A surprising number of workers don't even realize that their company has a culture--a distinctive code of behavior, language, and customs, a manner of operating, and a way of thinking about the world outside. "That's especially true of big companies," says management consultant Kathleen Miller of Louisville, Ky. "They just assume the world does things the way they do." When you study the other company's culture, focus in particular on how decisions are made and who makes them. Use your network to locate and talk to executives of the other company. "Get them to tell anecdotes about the company," Miller advises. "Do they describe the company as operating like a family? Are promotions political?"
Michael Gould wishes he had done more homework before he sold his company, Learning Tree University, to Corinthian Colleges in 2003. Both companies were in the post-secondary education business, but the similarities were mostly superficial. Learning Tree offered day- and weeks-long courses in disciplines such as project management to adults well into their careers, including nurses and other professionals. Corinthian provided basic college courses to high school graduates. The two companies had different approaches to everything from marketing to training their faculty members.
Gould assumed that Corinthian would allow Learning Tree to continue in its ways. "I should have sat in on their senior management meetings and walked the corridors to talk to their people before agreeing to the sale," he says. "I would have had a better sense of how rigid they were going to be." As Gould tells it, Corinthian insisted that Learning Tree discard its direct-mail campaign targeted at professionals and adopt Corinthian's broader TV marketing technique. "It was using a tennis racket to play golf," says Gould, who departed. (In an E-mail, Corinthian says: "Learning Tree was losing money when we acquired it, and misrepresentations related to those losses are among the main reasons the acquisition failed. We closed the Learning Tree Centers in May of last year.")
When one company takes over another, says consultant Barry Phegan of the Meridian Group, headquartered in Larkspur, Calif., "it says that it is going to use the best ideas and methods of both companies. But it doesn't do that. It imposes its will on the other company."
That is often the case even when the dominant company knows little or nothing about the other company's business. "The new guys were so smart, so rich, so successful that they thought they knew everything about everything," says an exasperated former executive of a blue-chip company taken over by a younger one. "At one meeting, some of the ideas they had about how we should conduct our business were so outrageous, some of us thought they had to be kidding." But they weren't. "They came in with such momentum," the former executive says. "They were deities."
advertisement
