Tobias Umbeck: Results Delivery in Merger Integration



Most companies understand that merger integrations can bring a clash of cultures, but they don't know how to ensure a smooth transition. Tobias Umbeck, a partner with Bain's Results Delivery practice, shares three ways that companies can manage change, deliver better results and build a better company.

Read the Bain Brief: Change Management in Merger Integration.

Read the transcript below.

TOBIAS UMBECK: There's a famous quote that says, "Culture eats strategy for breakfast." And you can apply that to merger integration and that would be culture and people issues would eat all your synergies for breakfast and your entire company for lunch, if you don't manage the change really well. And when we discuss that with executives, there's no disagreement on that. I mean, people know that this is a number one topic in any merger integration of people with culture clashes and so on. But there's more questions around the how. I mean, how exactly do I manage that, what tools do I apply, when.

Of course, every integration is different, but if you look across dozens or hundreds of them, there's probably three techniques which emerge that help you to manage the change, deliver better results, and build a better company at the end of the day. And the first one really is that you want to embed change management deeply into the integration, and that means don't make it a separate work stream. I mean don't make it an effort that you delegate to HR and off they go, but make it a C-level-led, CEO-led exercise. And don't wait. I mean just start in your diligence, you can pinpoint a few issues already, and more importantly, there's a lot of things you can do prior to closing. Even though you're still under antitrust, you can do a lot.

And that brings me to my second point, which is invest into co-creating the foundation of the new company together with the executive team. My favorite example is an integration where the CEO brought together his executive team for a sequence of four- or three-day workshops, so quite an investment of time. Three of the workshops happened prior to closing and they used them to get to know each other, get to know each other's company. But more importantly, really built that foundation, in terms of strategic pillars, in terms of operating model, in terms of an approach to the merger integration, and the change plan in a very robust concept to engage the broad organization.

Which brings me to my third and last point. You do want to overinvest into cascading the change through the organization. Because what do people hate most in any change effort, in any merger integration? It's loss of control. So things are being done to you and you don't have a voice and you can't influence things. So similar to the executive workshops, you can have a top-100 management offsite right after closing, where you bring together the team, have a dialogue with them, engage them in the content, and really have them provide feedback. Then continue on that path. I mean, you can have town hall meetings, workshops, cascading all the way down through the organization.

And we've seen time and again that this is a big investment in change management, but it delivers huge returns. And huge returns means higher synergies, higher stock price, higher people engagement scores. And at the end of the day, it means it contributes to building a much better company, and that is very, very rewarding.

Read the Bain Brief: Change Management in Merger Integration.