The mergers and acquisitions process is full of hurdles. If your organization is planning to acquire another one, there are a few questions you need answered. Typically, this process involves determining the other organization’s profitability, how efficiently it’s run, and whether it will be a good deal overall.
Through countless business acquisition processes, one aspect often gets overlooked: human capital. Your organization isn’t only acquiring numbers; you’re also acquiring an entire organization of people who have functioned as an independent unit up until this point.
With the right strategies in place, the current leadership in the organization being acquired can be a huge asset to the new organization.
Here are four ways to use executive assessments to navigate the acquisition process.
ASSESS THE CURRENT LEADERSHIP
How can you tell how strong the executive team is that you are acquiring? This is where executive assessments come in. They give you an objective way to measure whether an individual will be a good fit in the larger organization after the acquisition.
For instance, if you’re preparing to acquire a small, family-owned business, executive assessments will help determine how leaders in that business will do as part of a bigger organization. Will they function well with having a boss after calling the shots themselves? How motivated are they to be a part of the new team? How well will they lead after the shift in direction that will inevitably occur after the acquisition?
CHOOSE YOUR TEAM
Executive assessments do much more than determining how a leader feels about the changes about to take place. They can also help determine if they’ll be a good fit in the acquiring company’s culture. Will they be motivated to operate in a new role and environment? How well will they fit into the executive team you already have in place?
One of the benefits of an acquisition is that you don’t always have to go searching for new leadership. Because the new organization comes with a built-in leadership team, executive assessments can help you determine who to keep in their current positions, as well as who would function well in new roles within the larger organization.
You may determine that the acquired leadership is effective in their current roles and the acquired organization functions more like a division than a business that’s been absorbed by your organization.
AVOID THESE MISSTEPS
One of the biggest mistakes acquiring organizations make is not looking at the people aspect of the puzzle. Ignoring this means that they don’t know who they’re acquiring or what talent they may be dismissing.
Another mistake is assuming that leaders that are effective in their roles will be similarly effective post-acquisition. They might not like the direction of the business after the acquisition and may not be motivated to stay.
Not reaching out and working with the leadership of the acquired organization will also hurt you in the long run. They have an influence over their employees, meaning that they can positively or negatively impact the way the organization functions going forward.
DEMONSTRATE YOUR COMMITMENT TO ONGOING SUCCESS
Using executive assessments in the acquisition process has the added benefit of demonstrating your commitment to the acquired organization. This level of assessment is an investment. Engaging in this process lets the team know that they are worth investing in and that their development as leaders is important to you and the ongoing success of the organization.
They will also help you identify talented new leaders. Without an objective look, you might never know the abilities someone can bring to your organization. Discovering leaders sooner will let you fast-track their development and put them on a path of being successful in the future state of the organization.
Acquisition means big changes for both organizations involved. Executive assessment tools can help you avoid some of the stumbling blocks. They’ll provide you with in-depth data on your people, objective and accurate expectations, as well as the perspective necessary to make the new organization run smoothly from a human capital standpoint.