Avoiding Death by Merger

I used to run a post-merger clean-up team for IBM years ago, and have since spent a great deal of time thinking about and dealing with major mergers that clients have undertaken. In a market like this, consolidation and acquisition are inevitable, and knowing how to play in what will likely be the kind of massive change that occurs after a merger can be a critical personal survival skill.

These big movements can have a major impact on you if you are an employee or customer of the company being acquired and often, even they are connected to the company doing the acquiring. Given many of you will be “merged” this year, let’s talk about avoiding death by merger this week.

We’ll close with my product of the week, which could represent the birth of a new Google-like company.

Mergers: They Almost Never Meet Expectations

Of all of the mergers I’ve covered, only the Apple acquisition of NeXT exceeded expectations, and it did so by so much that it almost makes everything else look better on average. The problem is that in the early stages of an acquisition — assuming it isn’t hostile — both sides get into selling mode where the negatives are downplayed and the positives are either accentuated or imagined.

This means that if you want to make an informed decision as either an employee or customer, you need to do your own homework, and this starts with taking a look at what kind of merger it is and what the past history of the acquiring company is with regard to mergers.

For instance HP, Cisco, EMC, and Oracle generally are good at making sure customers from the acquired company are protected but can vary widely with regard to internal changes depending on whether the intention is to leave the company independent or merge it into the rest of the firm.

As a customer, it is important you look at just how previous customers were treated and if there are people who are critical to your success, during a merger is the best time to reward their dedication — and protect this resource — by making your needs known. The voice of customers — particularly big ones — tend to be very powerful even during a merger, and a timely commendation for a person or organization that has provided great service will go a long way to preserving it.

Mashing Companies Together

Much of the time we spend talking about mergers, we speak about the cultural differences between the companies. This can be particularly pronounced between an older firm and one that is younger. Often with younger firms, there is a lot of latitude with regard to what employees can do and what managers can authorize. The older a firm gets, the more control is typically taken away from managers and employees and decisions are institutionalized.

While these changes may have happened gradually in the older firm, they come like the shock of a cold shower to those used to working in a younger company. In addition, the older a firm gets, the more political it becomes. This means the focus tends to shift from getting the job done right to maximizing credit and minimizing blame. Those who like playing politics will like the change; those who don’t probably won’t or they already would be working for a large older firm. However, if you plan to stay, you’d better find a mentor who can teach you the ropes — otherwise, you are likely to flame out and leave unexpectedly.

Keeping the Companies Separate

In the HP/EDS situation, you have what amounted to a reverse merger. This is where the HP assets will be merged underneath the EDS leadership, and EDS will remain independent for now. These types of mergers tend to initially be far less traumatic for the company being acquired than for the people in the acquiring company who end up reporting to new management.

EDS is unusual in that it will report up to the office of the CEO. Most acquired companies end up reporting into an existing line of business. However, the same rule applies, and that is that the subordinate organization must quickly come up to speed on both the good — and the bad — practices of the new parent.

The best way to do that is find someone that was part of an earlier acquisition and take them out to lunch with the goals of both finding out what they would have done differently were they in your place and perhaps finding a mentor who will bring you up to speed quickly. Often, the worst thing about the changes is you don’t expect them — by asking questions, you will get a better sense of what is coming.

Should You Stay Or Leave?

This is a personal question, and it really depends on what your goals are. I know that for me, I lost track of my goals after my first acquisition and now regret that. This is a good time to assess why you are at the firm. A larger company can provide a greater choice of opportunity, it can provide a higher level of security, and it can be much more stable. However, it can also be very bureaucratic and political, and there are many that find that kind of environment strips the fun out of the job for them.

In addition, it is common for both the acquiring and the acquired company to reduce headcount in areas where there is overlap or in areas that are no longer strategic. If you are in one of these areas, you’ll want to quickly assess what your likelihood of survival is, and realize that it is vastly easier to get a new job if you already have one.

Like all kinds of change, mergers provide opportunities for advancement and risks that include unplanned unemployment. The trick is to get as much information as you can about the change, and assess your own wants and needs to create a plan of action that will assure you get the strongest benefit.

Product of the Week: Apture the Next Google?

With similar Stanford roots, Apture may revolutionize hyperlinks. It is hard to describe simply what this is, but for lack of a better term let’s call them “Virtualized Hyperlinks.”

Where you typically would click on a link and go to another page, this technology opens up an embedded window inside the page you are viewing, which keeps you from navigating away from the subject matter.

However, while the end-user benefit is clear, the benefit to the author and publisher are even greater. In testing this, I found I could create better links faster using Apture’s editing tool, which embeds a strong search engine into the process. For the publisher, this provides an opportunity to increase advertising real estate and increase revenue.

This could provide unique revenue opportunities, even for services like Reuters and Bloomberg. To make it work, all you need to do is add one line of HTML code to the document. The WashingtonPost.com and the BBC are a few of the first to use this technology.

You can use the technology to embed videos and charts as well as just select the specific text on another Web page you want to reference. You can see the result on this site by clicking on “Carly Fiorina” or the “Compaq/HP” link in the piece, which took only about 30 seconds to modify.

This is the kind of thing that could revolutionize how I write, increase its impact, and vastly improve the reader’s experience, so it is my product of the week.