I’ve been through the merger-and-acquisition rodeo three times.
Different companies. Different executives. Different buyers.
Same script.
First, a quick definition.
A merger is when two companies combine to form one business. Ownership, operations, employees, assets and customers may all be combined.
An acquisition is when one company buys another company—or substantially all of its assets.
The difference is important.
Especially when you’re the company being “merged.”
Step One: The Strategic Plan
It begins with the Board of Directors and senior leadership disappearing to some remote location for a strategic planning retreat.
The mission:
Develop our three-to-five-year growth plan.
Every department presents:
● Short- and long-term goals
● Revenue and profit projections
● Staffing and capital requirements
● A beautiful PERT chart showing exactly how we’re going to get there
Eventually, all the numbers are combined.
Revenue goal: $1.5 million.
The number is announced to the employees.
Posters go up.
Charts appear in conference rooms and throughout the shop.
Everybody is told:
This is our future.
Let the games begin.
Step Two: The Other Strategic Plan
About a month later, the Board and senior leadership meet again.
This meeting is different.
No posters.
No employee participation.
No inspirational banners.
CONFIDENTIAL.
The Chairman begins:
“Our industry is expanding, and we have an opportunity to investigate a possible merger or acquisition.”
Then comes the magic sentence:
“This could be very lucrative for all of you.”
Senior management will receive company stock as part of their bonuses.
If the deal goes through, those shares could eventually be worth five or six figures.
To get there we need to significantly increase our bottom line with higher revenue and significant cost savings.
Suddenly, the strategic plan we spent months developing needs a few minor adjustments.
Revenue goal?
Raise it from $1.5 million to $1.9 million.
Staffing plan?
Hiring freeze.
Including those expensive skilled people we’ve spent the last two-and-a-half years recruiting because we supposedly needed them to hit our long term growth targets.
“We can get to $1.9 million by squeezing the players we already have.”
Translation:
Full-court press.
Then each department is asked to identify its expensive employees.
Mr Milton ll, recently filled the position of VP of sales with his son Milton lll. Other Southeastern Mid States College graduates with Arts and Letters degrees are being considered for other high level positions.
Benefits?
Cancel the company dental plan.
Cost reductions?
Switch to two-ply toilet paper.
Thanksgiving turkeys?
Butterball is out.
Margarine-brand Walmart turkeys are in.
Everybody pushes harder.
People work longer.
The troops are driven to the brink.
And guess what?
It works.
Revenue jumps.
Profits climb.
The company’s valuation increases.
And those stock options held by senior leadership suddenly look very attractive.
Time to Tell the Troops
All employees are paraded into the local IMAX theater to hear about their exciting future on the big screen.
Apparently, a normal conference room isn’t large enough to contain this much excitement.
The CEO takes the stage.
“Fellow Acme Tools team members, we have an exciting announcement.
“We have been holding discussions with Steel Conglomerate regarding a potential merger.
“Their financial resources, technological leadership and skilled employees perfectly complement our mission and goals.
“This combination will create tremendous opportunities for everyone.
“And we want to assure you that nothing is going to change.”
Questions?
“Will there be layoffs?”
“No plans for layoffs.”
“Will management change?”
“Both companies will be equally represented.”
“Will our operating style change?”
“Absolutely not.”
“Dress code?”
“No change.”
“Benefits?”
“No changes.”
Pause.
“Well, except we’re temporarily eliminating the dental plan.”
Someone raises a hand.
“Can we at least switch back to Butterball instead of margarine turkeys?”
Another employee:
“And maybe better toilet paper?”
The CEO smiles.
“Those items are on the agenda for next month’s Board meeting, after we review the numbers.”
Excellent.
Our corporate future is secure.
Toilet paper is under Board review.
Let the Culture Wars Begin
Within days, the really important merger issues emerge.
Whose office is bigger?
Who gets the river view?
Whose title survives?
Who reports to whom?
Which company’s procedures are now “standard”?
Whose computer system gets dumped?
And, most importantly:
Whose boots should you start licking if you want to get ahead?
Bedlam.
But management remains confident.
Remember:
Nothing is going to change.
The Victory Dinner
Then comes the grand merger celebration.
Employees are invited.
Spouses and significant others are not.
“Sorry. Not enough room.”
In the center of the ballroom is a magnificent ice sculpture displaying the name of our newly merged company:
STEELACME
Beautiful.
Behind the stage are the two company names:
STEEL
CONGLOMERATE
and
ACME
TOOLS
The two co-CEOs take the stage and deliver inspiring speeches about partnership, equality, one team, one vision and our exciting shared future.
Then something happens.
The ballroom is warm.
The ice begins to melt.
And shortly after the co-CEOs finish speaking, the ACME portion of the sculpture starts leaning.
Then cracking.
Then sliding.
Finally, the entire ACME section breaks loose and crashes directly into the tray of toothpick-stabbed meatballs.
Everyone stares at what remains standing:
STEEL
Apparently, the ice sculpture knew something we didn’t.
Our merger had just become an acquisition.
Leadership’s stock?
Booming.
Dental plan?
Gone.
Butterball turkeys?
Gone.
Good toilet paper?
Still under Board review.
But don’t worry.
Management promised us:
Nothing is going to change… Right?
You Cant Make this stuff up 