Combining forces

when two organizations become one, the pressure for ROI is high. Project managers can lead the way


When two organizations become one, the pressure for ROI is high. Project managers can lead the way.

By Donovan Burba

Illustration By Michael Brandon Myers


When a merger or acquisition deal is sealed, months of negotiations between executives end. But then the real work begins: integrating two organizations’ systems, processes and cultures to quickly deliver the expected ROI. The stakes for these change management projects are always high—and the demand for skilled project managers to lead them has never been greater.

Global mergers and acquisitions (M&As) reached record levels in 2015, with nearly US$4.6 trillion in transactions completed or pending—a US$2 trillion jump from 2013 and a more than US$600 billion increase from 2014. The volume of deals also was an all-time high and included 17 valued at more than US$20 billion. For example, H.J. Heinz and Kraft Foods Group completed a US$55 billion merger in July 2015, a blockbuster teaming of U.S. companies that created the world's fifth-largest food company.

When the ink is dry, project teams jump into action to turn a deal's strategic value in the boardroom into an on-the-ground reality. The clock is ticking, and executives are watching.


“I've seen organizations where legacy applications, policies and/or teams remain … for no other reason than that the integration of long-ago acquisition was never completed.”

—Stephanie Blanco Gress, PMP, Sound Physicians, San Juan Capistrano, California, USA

“The biggest challenge I face on each assignment is high expectations,” says Kieran McNamara, a post-acquisition integration project and program manager consultant based in London, England. “The executives have usually spent so much time focused on the deal that little or no time is spent on working out an operational integration model.”

The global boom in mergers and acquisitions (M&As) has generated some big numbers—including layoffs. A month after food titans Kraft Foods Group and H.J. Heinz merged in 2015, the new organization announced it would cut 5 percent of its global workforce. Project professionals can take the following steps to keep their jobs—or at least ensure they'll be in the best position to pursue new opportunities in the wake of an M&A.


Take a deep breath.

Tasked as being change agents, project, program and portfolio managers are likely to have above-average job security after an M&A deal, says Stephanie Blanco Gress, PMP, San Juan Capistrano, California, USA. One of her former CFOs used the M&A process as an opportunity to establish and staff a permanent enterprise project management office. “Post-acquisition, project professionals can further improve their odds of employment by proactively offering assistance in the acquisition and staying focused on what they can control, versus speculating on what could happen,” she says.


Control the pace.

Even if layoffs are in the cards, the drawn-out nature of many M&As can give project professionals the opportunity to ask for a gradual phaseout, says Betsy Mathew, PMP, DarkMatter LLC, Abu Dhabi, United Arab Emirates. During that time, she suggests drawing on the organization for recommendation letters and other resources that can help with finding a new role.


Build bridges.

Although no one likes to lose a job, acting like a professional during a time of transition can make finding the next position much easier, says James Holman, M&A portfolio lead, Charter Communications, St. Louis, Missouri, USA. “As my CIO has said over the years, do a good job, even work yourself out of a job, and others will see the value you add and find more opportunities for you,” he says.


Post-M&A project management challenges are unique: Project leaders find themselves working with a timeline and requirements set by top leaders who aren't necessarily familiar with the nitty-gritty details and sticking points of M&A execution. For example, due diligence documentation comes from such a high level that it typically contains little relevant information for building an integration roadmap, Mr. McNamara says. So delays are common, particularly at organizations that lack M&A experience or leadership, he says.

“The real work starts at the discovery phase, which no one gives time for. The expectation is that you can start delivering at once.”

From the start, Mr. McNamara emphasizes to stakeholders that strong leadership is necessary to build a clear roadmap for each work stream. “This is where you will require your board or sponsors’ support to drive integration goals,” he says. “Be clear on the roles and dependencies from the start.”

“You can't just say on day one, ‘Okay, everything runs on the new company's system.’”

—Christian Schmittknecht, PMP, Novartis, Basel, Switzerland

To ease the transition for both organizations, project leaders must start by involving senior leaders in the portfolio integration process as soon as possible, says Stephanie Blanco Gress, PMP, vice president, M&A integration and program management, Sound Physicians, San Juan Capistrano, California, USA. The institutional knowledge each side brings helps accelerate the process.

“Then, each department leader should develop a team or department charter that describes the end-state vision for the combined organization, including the in-flight project portfolio,” she says. “The charter can be as brief as one page, but it should include outcomes, assumptions, dependences, key milestones and potential areas for synergy and discord.”


“You need to pad integration projects with more time than you think might be necessary.”

—Christian Schmittknecht, PMP

In the most recent large acquisition she managed—Sound Physicians’ acquisition of Cogent Healthcare—Ms. Blanco and her team worked with leadership from both organizations to determine which existing projects in the clinical portfolios would continue or be dropped. Close collaboration helped her team finish the process of combining the clinical portfolios in just 45 days.


The global number of mergers and acquisitions—and the value of those deals—has shot up in recent years.


Source: Institute for Mergers, Acquisitions and Alliances

“This process could take years or, frankly, never be completely finished if teams don't work effectively,” she says. “I've seen organizations where legacy applications, policies and/or teams remain that support only a portion of the business for no other reason than that the integration of long-ago acquisition was never completed.”


From the start of any M&A process, the top priority is to keep the organization running smoothly. To prevent operating problems and gaps, sometimes a few system and service overlaps need to be tolerated during integration, says Christian Schmittknecht, PMP, global head of country IT, mergers, acquisitions and divestitures at pharmaceutical firm Novartis, Basel, Switzerland.

Whether it's IT global infrastructure or organizational systems such as human resources (HR), redundant departments and functions can be especially significant during a major multiyear merger. For instance, in 2014, Novartis began a series of limited M&A transactions with other major pharmaceutical companies, and a year and a half later Mr. Schmittknecht estimates that the process of integrating the affected systems from each company is only about halfway complete. The deliberate pace is intentional and ensures fewer glitches during integration. As data systems and business functions migrate, the other company phases out its corresponding system, he says.

“You can't just say on day one, ‘Okay, everything runs on the new company's system,’” he says.

Workforces, cultures and policies need to be merged, too. To facilitate all of these transitions, project teams should deploy structured communication tools, says Betsy Mathew, PMP, director, people and organizational development, DarkMatter LLC, Abu Dhabi, United Arab Emirates. These tools, ideally outlined in a post-merger integration plan, can include microsites providing timely updates and employee-focused FAQs addressing general concerns and queries.

“M&As by their nature are usually very restrictive in terms of what can and cannot be shared prior to close. This can create uncertainty amongst staff,” Ms. Mathew says. “It's better to be honest and let staff know what is likely to happen rather than let them feed on rumors.”


“Early HR engagement gives project leaders the ability to analyze and understand each company's organizational structure, management style, decision-making process, and employee skill sets.”

—Betsy Mathew, PMP, DarkMatter LLC, Abu Dhabi, United Arab Emirates


Eliminating redundant services, such as HR, finance, facilities and marketing, requires project management teams to adhere to the business cases. “This is your single source of truth,” Mr. McNamara says.

For example, when two medium-size companies merge to form a new company, each comes with an HR department with processes and systems in place to meet the needs of its pre-merger organization. But post-merger, neither can scale those systems to meet the new need. “The board then needs a business case for each stream so that it can prioritize future investment,” he says.

Stakeholder management is key to that process, he says, as project leaders secure buy-in for decisions rooted in the business case. Personalities and politics can spur conflicting objectives over the direction of the integration roadmap. “When that happens, your task as a project leader is to document the business cases for each of the options and look for your board and sponsors to direct according to the business case, future strategy, funding and any other external influences.”

For instance, HR project leaders have to decide which benefits to continue and which to discontinue, and how to compensate employees in the case of the latter, Ms. Mathew says. And a word of warning to organizations expanding their global footprint: M&A integration projects can encounter region-specific requirements. In the Middle East, for example, residency and work visa requirements, along with nationality quotas, can present challenges, Ms. Mathew says.

“Early involvement of an HR project manager—even as early as the pre-merger/due diligence phase—means that any cultural differences and risks can be identified and programs can be put in place that will ensure a smooth transition for all parties involved,” she says.

While M&As often create redundant functions, layoffs aren't automatic, Ms. Mathew says. (See “Survival Guide,” page 41.) To build a post-merger talent and resource plan, she finds answers to several questions: Can the acquiring company absorb the skill sets and expertise? Are there project resources that can fill current gaps, and who are the key staff to retain? What benefit programs are currently offered, and what aspects can be transitioned to make change less stressful for the newly acquired staff?

“Early HR engagement gives project leaders the ability to analyze and understand each company's organizational structure, management style, decision-making process and employee skill sets,” she says.

The bottom line with M&A projects, says Mr. Schmittknecht, is that getting teams from organizations to work together effectively requires a deft hand—and plenty of patience.

“You really need to rethink your assumptions about how things work. You need to pad integration projects with more time than you think might be necessary. The time needed to form an effective team is just longer due to different corporate cultures and ways of working.” PM




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