The merger and acquisition process is full of hurdles. If your organization is hoping to acquire another one, you’ll be busy doing due diligence. 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 acquisition processes, one aspect often gets overlooked: the 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. Disregarding this factor can trip you up in the future.
With the right strategies in place, current leadership in the organization being acquired can be a huge asset to the new organization. First, though, you have to determine if they’ll be a good fit.
Here are four ways to use executive assessments to navigate the merger and acquisition process.
1. Assess the Current Leadership
Often, the leadership in charge of the organization you’re acquiring has done a great job. If they hadn’t, their organization wouldn’t be successful. This doesn’t automatically translate to them being successful within the broader organization after the acquisition, however.
How can you tell whether to invest in the current leaders or let them go? This is where executive assessment tools come in. They give you an objective way to measure whether or not 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 next organization? How well will they lead after the shift in direction that will inevitably occur after the acquisition?
2. Use Executive Assessment Tools to Choose Your Team
Executive assessments do much more than determine 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 organizational culture you’ve already established. 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.
As you look at the entire leadership structure of the organization being acquired, you may actually determine that they’re so effective that management can stay in their roles and continue running things as before. This way, the acquired organization functions more like a division than a business that’s been absorbed by your organization.
3. Avoid These M&A 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 without exploring if they’d be a good fit in the new organization.
Another mistake? Simply assuming that leaders that are effective in their roles will be similarly effective post-acquisition. They might not like the direction things take after the acquisition takes place and may not be motivated to stay. It’s a waste of time and money to invest in someone who is on the lookout for new opportunities elsewhere.
Not reaching out and working with the leadership of the acquired organization will also hurt you in the long run. They have the ear of all the people in the organization being acquired. This means that they can positively or negatively impact the way the organization functions going forward.
4. Use Executive Assessment Tools to Fine-Tune Success
Effectively using the information gleaned from executive assessments can help your organization sidestep these pitfalls. Because you’ll know the skills and qualities of the leadership you’re assimilating, you won’t have to wait a whole year to discover if they’ll work out. Executive assessments help you evaluate risks and take action sooner.
They also help you identify talented new leaders. Without an objective look, you might offer someone a severance package and have them move on, never knowing the potential that’s slipped through your fingers. On the flip side, you may transition them into the new organization but never realize what a great leader they actually are. Discovering them sooner will let you fast-track their development.
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 improved communication, objective and accurate expectations, as well as the perspective necessary to make the new organization run more smoothly.
At PRADCO, we have the experience, drive, and tools to be your partner in managing your talent. We’ll take the time to learn about your organization and customize solutions for you. We’re ready to help you hire with confidence and develop your people. If you’re ready to get started, let’s talk.