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Leading When Your Company Is Being Acquired

by Evan Smith and John W. Pancoast, Featured Contributors

WHAT SHOULD the senior managers of a company do while their organization is being acquired? A friend of the firm asked this fairly simple question the other day, and we thought our answer could be helpful to some readers.

We think of the leadership in an acquisition coming necessarily from the executive ranks of the buyer. We expect them to lead with a clear acquisition strategy, a compelling deal Mergers_and_Acquisitions_vision, open and honest communications, and thorough engagement of the combined organization. But, as Keith Dunbar noted recently, executives of the selling organization have a very critical and distinct leadership role, especially at a level or two below the executive committee – those solidly within the firm’s senior management.

Senior management is often the most “at risk” (of downsizing or being “packaged out”) in a merger or acquisition. The executives above them are often made fairly wealthy as a result of the transaction. Managers below the senior level are frequently retained due to their valuable business and operational knowledge. Senior management is expensive to carry and vulnerable to elimination as acquisition teams work out redundancies. Leading from this position of vulnerability can be challenging.

My colleagues and I believe that senior managers in the target company should think of their role as balancing three important constituencies – 1) the new combined company, 2) former colleagues and subordinates, and 3) their personal well being. They have strong obligations to all three; pursuit of less than all three neglects some important dimension. Here’s a framework and some guidelines for thinking this balance through.

  1. My company. By this, we mean the new, combined, company. Some leaders might see the merger as a welcome situation, but frankly, most leaders will hesitate fully to commit to the new enterprise for some period of time. Once the deal is done, do not hesitate to step forward as an advocate for the combination. Seek to understand the benefits of the combination from a strategic perspective. Communicate the deal vision and stay on script. If you believe there are serious flaws, communicate these personally and confidentially. Commit to the integration plan. Get involved in co-sponsoring or jointly leading integration teams in your functional area or area of interest.
  2. My colleagues. Everybody in your old organization is going through some kind of transition, one that usually challenges the status quo and demands changes in the way they see and do their work. Eschew the low-value discussions about the annoyances and difficulties of adapting to the new regime. Even if you, yourself, have doubts and concerns, you will be of more value to your colleagues and subordinates by helping them to do their best in the situation that presents itself. In addition, your empathy for colleagues’ challenges or trauma may surface important data that can help you and others to address collective obligations to “My Company.”

An acquisition is one of those unexpected times when new leaders are discovered and recognized for their contribution. Help your people to align with the new company leadership. Make executive-level introductions for them where you can, in the interest of their success. Help them to excel in any role they may have in the integration, to be their personal best.

  1. My personal well-being. Yes, it’s ok and proper, in fact necessary, to be concerned about your own future. The key here is to focus on things that will serve you well, in combination with the first two components of your leadership.

A former senior manager, a client who was himself involved in a merger last year, referred to this as refining one’s “Personal Brand”: what it is that you know, what you are good at, where and how you add value to particular situations, and how you accomplish important objectives. Live this brand as you engage with people during due diligence, integration planning, and integration leadership. Clarifying your brand in this way will serve you whether you stay or leave. At the same time, talk to your network outside the organization. Keep former colleagues, customers and the like up to speed on what you are doing, and be honest about your prospects for and desire for staying.

Finally, develop a Plan B – and perhaps a Plan C. Flesh out your plans in enough detail that you have a viable alternative to continued employment in the new organization. If you don’t do this for yourself, you’ll find it harder to help your colleagues when they need to do this for themselves.

These three dimensions of leadership are in dynamic conflict with each other. At the very least, they compete for your limited time. Deeper than this, however, is the inherent conflict between commitment to the new organization, to your long-time colleagues, and to your own future.

You don’t need to choose between the new company and your longtime colleagues, or between the company and yourself. Viewing these three dimensions as elements to balance in your own way gives you permission to devote appropriate time to each of them. And knowing that you have committed to addressing the full portfolio will allow you to commit fully to each step, whatever that may be, from a well-prepared and considered foundation.


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