Mergers made simple
Merger survivors: Greg Wanchap, Kiran Singh, Chris Shay, Lawrence Chan and Chrystal Kimber. Pic by: Sarah Marshall
Handling company mergers well takes skill, no matter where you sit in the organisation.
Last year was the biggest year for company mergers in Australian history.
Nearly $54 billion worth of deals were signed according to Ernst and Young's 2007 Merger and Acquisition Index, including the $9 billion Fairfax-Rural Press takeover.
Global economic conditions have weakened due to the credit squeeze and market volatility, so top-end activity is slowing this year. But the mid-level market (mergers under $1 billion), and mergers kept within Australia, are expected to remain unaffected.
Surviving the merger comes down to a few simple principles: Stand up for yourself, be proactive with your boss, and expect and welcome a completely new culture at work.
"Go to your boss," says Dean Davidson, Queensland general manager of Hudson Global Resources.
"Your immediate manager won't have all the information either, but clarity and an open dialogue with your manager is the best thing.
"From a management point of view you need to appreciate that you've got people's livelihoods at risk whose thought processes may not be as clear as they usually are."
And always trust your instinct.
"I think it's inevitable when there's speculation in an organisation, it creates uncertainty, there will be a natural tendency for internal competitiveness in the environment as people make sure they're positioned as securely as possible," Davidson says. "Again, speak openly with your managers; understand where you're positioned.
"It's critically important if you're sensing there is some uncertainty with your position to speak up about it."
Ernst and Young advisory partner, Geoff Stalley, who helps with integration after a merger, says most workers should expect to be part of two or three mergers during their careers and will pick up skills each time.
He says in the past 12 to 18 months, Australian companies have cleaned up their act in planning for the big announcement, which is greatly easing the way staff are affected.
"Too many acquisitions over the years have been poorly planned, decisions made all over the place," he says.
"Australia has come an enormous way and a lot of it has been driven by the rigour private equity firms have put into the planning, that's rubbed off on to the corporate world. They are now planning mergers, visions for the future, well in advance of the announcement."
You merge to make a better company, not a bigger company, according to WHK Horwath managing director Greg Wanchap who is overseeing the merger between his advisory and financial services firm and Horwath Brisbane in the inner city.
"The real key to a successful merger is to focus on the people," Wanchap says. "If you focus on all of the support mechanisms like software, they are outcomes, but people make things work."
"People in our type of business service clients, have the relationships with clients, and they need to feel very comfortable with what is happening."
A survey of mergers and acquisitions by the Mercer group in 2006 found human capital risks to be the most important but most difficult to manage in the success of a merger.
WHK Horwath will have 180 staff post-merger, without any lay-offs, and is adopting a two-pronged approach to guide staff through the merger.
"We are very transparent," Wanchap says. "Our people are the first to know, when it's commercially appropriate. We don't want them reading about it in the paper."
But he says the emotional response of staff to a merger is still the unknown factor and it is impossible to determine how long staff will need to adjust to new working conditions.
"None of us really like change," Wanchap says. "The important thing is that our people really understand about the emotion of change, it's a very emotional thing. And we all deal with it in a different way, and you have to understand that your colleagues may not be at the same level as you in dealing with this."
Dean Davidson says even when mergers don't lead to lay-offs, the change of culture within a workplace produces a natural attrition. "When two organisations do merge, there's a chance two distinct cultures will come together and there's a natural fallout from that, and companies (must) expect that and cater for it," he says.
Hudson Global Resources works with companies on exit strategies for employees made redundant after a company merger as well as finding the right staff for the new structure.
"Companies like ours can run a six-week process where staff skills are evaluated, resumes updated and assistance is given in future employment. That's a very good way for organisations to be well received by staff," Davidson says.
In the 2007 September quarter, 97 mergers were reviewed by the Australian Consumer and Competition Commission, 90 per cent of which proceeded unopposed. Stalley says last year's acquisitions were dominated by private equity firms but this year is shaping up to be the year of the corporate merger which traditionally has a greater impact on employees.
In the mix
Mergers in the making
Last year was the biggest year for company mergers in Australian history.
Nearly $54 billion worth of deals were signed according to Ernst and Young's 2007 Merger and Acquisition Index, including the $9 billion Fairfax-Rural Press takeover.
Global economic conditions have weakened due to the credit squeeze and market volatility, so top-end activity is slowing this year. But the mid-level market (mergers under $1 billion), and mergers kept within Australia, are expected to remain unaffected.
Surviving the merger comes down to a few simple principles: Stand up for yourself, be proactive with your boss, and expect and welcome a completely new culture at work.
"Go to your boss," says Dean Davidson, Queensland general manager of Hudson Global Resources.
"Your immediate manager won't have all the information either, but clarity and an open dialogue with your manager is the best thing.
"From a management point of view you need to appreciate that you've got people's livelihoods at risk whose thought processes may not be as clear as they usually are."
And always trust your instinct.
"I think it's inevitable when there's speculation in an organisation, it creates uncertainty, there will be a natural tendency for internal competitiveness in the environment as people make sure they're positioned as securely as possible," Davidson says. "Again, speak openly with your managers; understand where you're positioned.
"It's critically important if you're sensing there is some uncertainty with your position to speak up about it."
Ernst and Young advisory partner, Geoff Stalley, who helps with integration after a merger, says most workers should expect to be part of two or three mergers during their careers and will pick up skills each time.
He says in the past 12 to 18 months, Australian companies have cleaned up their act in planning for the big announcement, which is greatly easing the way staff are affected.
"Too many acquisitions over the years have been poorly planned, decisions made all over the place," he says.
"Australia has come an enormous way and a lot of it has been driven by the rigour private equity firms have put into the planning, that's rubbed off on to the corporate world. They are now planning mergers, visions for the future, well in advance of the announcement."
You merge to make a better company, not a bigger company, according to WHK Horwath managing director Greg Wanchap who is overseeing the merger between his advisory and financial services firm and Horwath Brisbane in the inner city.
"The real key to a successful merger is to focus on the people," Wanchap says. "If you focus on all of the support mechanisms like software, they are outcomes, but people make things work."
"People in our type of business service clients, have the relationships with clients, and they need to feel very comfortable with what is happening."
A survey of mergers and acquisitions by the Mercer group in 2006 found human capital risks to be the most important but most difficult to manage in the success of a merger.
WHK Horwath will have 180 staff post-merger, without any lay-offs, and is adopting a two-pronged approach to guide staff through the merger.
"We are very transparent," Wanchap says. "Our people are the first to know, when it's commercially appropriate. We don't want them reading about it in the paper."
But he says the emotional response of staff to a merger is still the unknown factor and it is impossible to determine how long staff will need to adjust to new working conditions.
"None of us really like change," Wanchap says. "The important thing is that our people really understand about the emotion of change, it's a very emotional thing. And we all deal with it in a different way, and you have to understand that your colleagues may not be at the same level as you in dealing with this."
Dean Davidson says even when mergers don't lead to lay-offs, the change of culture within a workplace produces a natural attrition. "When two organisations do merge, there's a chance two distinct cultures will come together and there's a natural fallout from that, and companies (must) expect that and cater for it," he says.
Hudson Global Resources works with companies on exit strategies for employees made redundant after a company merger as well as finding the right staff for the new structure.
"Companies like ours can run a six-week process where staff skills are evaluated, resumes updated and assistance is given in future employment. That's a very good way for organisations to be well received by staff," Davidson says.
In the 2007 September quarter, 97 mergers were reviewed by the Australian Consumer and Competition Commission, 90 per cent of which proceeded unopposed. Stalley says last year's acquisitions were dominated by private equity firms but this year is shaping up to be the year of the corporate merger which traditionally has a greater impact on employees.
In the mix
Mergers in the making
- MBF and BUPA private health insurers
- QBE Insurance and Insurance Australia Group (IAG)
- Westpac and St George banks
- BHP Billiton and Rio Tinto mining giants
- Zinifex and Oxiana mid-tier miners
- Surfside Buslines and Sunbus
- National and Liberal Parties (well, maybe)
- Keeping a low profile is a bad strategy. If you don't speak up, your value to the newly merged company may be misrepresented.
- Don't assume the culture of your old workplace will continue. It is up to you to work out the chain of command, to put your hand up and look for ways to fit into the new structure.
- Organise a meeting with your new boss to discuss your new working arrangements, any holidays you may have booked or special working arrangements that have helped you strike a good work-life balance.
- Don't get precious about your environment. A new company and culture is being created. If you've sat at the same desk for five years, prepare to move.
- If you feel you have been unfairly treated, speak to your boss, the human resources department or your union.
- Support your workmates. Emotions are high and everyone will respond to the merger differently, so be patient.
- If you no longer believe in the values of the new company, or feel your potential has been stifled, vote with your feet. Even with budget estimates putting unemployment at 4.75 per cent by the June quarter of 2009, it's still a worker's market.
- If you're at the end of your tether, hire the 1999 movie Office Space with Ron Livingstone and Gary Cole, and relax in the knowledge that things could be much worse.
