Mergers and acquisitions almost always look good on paper. Greater negotiating power, the ability to cross-sell and leverage relationships, the scale to take on R&D projects that otherwise would have been out of the question, and think of all those synergies that can be stripped out...
In practice, it doesn’t always work out that way. Corporate history is littered with high profile M&A deals that ultimately proved little more than embarrassing and costly distractions, from AOL Time Warner downwards.
Getting it right requires smart judgement and sharp execution, as Alastair Aird well knows. He’s the global chair of Wavemaker, an 8,500 strong media agency formed from the internal merger of two WPP businesses, MEC and Maxus.
The decision to combine the agencies came not from WPP’s head office, but from its media division Group M, in 2016. The logic was simple: MEC was strong in Europe, Maxus was strong in Asia and clients increasingly wanted global solutions.
Aird, then EMEA CEO and exec chairman of MEC, was tasked with ensuring a smooth transition for the new agency, named Wavemaker after MEC’s specialist content division.
Here’s what he had to say about what can go wrong with M&A and how you can avoid it.
Not communicating enough
"You have to be absolutely clear why you’re doing the merger, and you have to be able to articulate it very clearly for your clients, your suppliers and most importantly your employees. If there’s a cost element to it, you might as well acknowledge that this is part of the reason, but you’ve got to be able to give all the other business reasons too.
"I always say we didn’t do one merger, we did 8,500 individual mergers and there were different implications for each person. Obviously you can’t speak with everyone but you need to be consistent and remember that there’s an emotional strand to this journey, as well as a functional one.
"How do you get them excited about the vision for the new organisation? What’s going to change, what’s going to be better? What does this mean from an employee value proposition? How do you engage these people in something that naturally everybody is against because it’s change and human instinct is not to like change?"
Taking too long
"The less time you allow people to catastrophise about what might happen, the faster you’ll get them to realise that it could be better than before. We created a group of four or five people who were empowered to make decisions very quickly, because once you announce it you want to move as fast as possible. For us it was complete within six months of the announcement.
"This was my second merger but for most it was their first, so I employed EY, who were brilliant at helping construct the functional process. We identified nine pillars like marketing and finance, and very clear work streams came out of each pillar.
"All the leaders for those pillars came together for a weekly call, which was important because even small changes like new email addresses impacted them in different ways. Identifying what the inter-dependencies were was key."
Biting off more than you can chew
"We tried to change our corporate structure at the same time as the merger, moving from having four regional hubs to having ten direct global markets and the other 50 countries done by hubs.
"While I still believe it was the right direction for us as a business, going through two fundamental changes was too busy. It was hard for people get direction. If I were doing it again I would have made it a two-step process, doing the merger and then 12-18 months later, while there was still momentum, changing the organisational structure."
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