SilverLink - Fall 2008 - (Page 6)

management attitudes or differing cultures. Making an M/A decision without management or cultural due diligence is similar to getting married without meeting the in-laws, because when you marry, you get more than your spouse— you get the entire family! The same is true in a merger or acquisition, although in this case the “family” can sometimes be hundreds or thousands of unique personalities. Management due diligence is crucial to identifying the strength of the leadership team and determining its commitment to support changes that normally occur during the integration process. Management also plays an important role in retaining the organization’s talent base by anticipating anxieties and misinformation common to any M/A. Alternatively, cultural due diligence takes a macro perspective on the M/A and identiﬁes the degree of complexity involved in employee integration into the new environment. These complexities may include the resolution of superﬁcial issues, such as titles or who gets the corner ofﬁce, as well as the creation of common core values and communication channels. Prior to a formal offer and after the ﬁnancial analysis and other preliminary data have been collected, the acquiring organization should conduct two assessments. At this point in the process, it’s imperative to assure that quality management is both on board and committed to stay following the M/A. It’s also necessary to assess the cultural and organizational ﬁt of the prospective organization. While the latter cannot always be determined due to size and conﬁdentiality restrictions, the former is a vital component of the M/A decision-making process. • Finally, on-site observations are utilized to identify the style and manner of the management team. In highly conﬁdential M/As, it is important to weigh the value of the information retrieved against possible rumors that may arise from this method. Culture Check or Culture Shock? Assessing the culture of the prospective organization is less invasive than assessing management, and can often be conducted in the form of an employee opinion survey. Although the assessment may appear to be an employee opinion survey on the surface, it is important that the survey be comprised of competencies linked to ﬁnancial performance and that it utilize the norms of a large corporate population. A unique beneﬁt of this type of survey is its ability to break down and compare results across departments, locations and managers. This allows the acquiring organization to compare the results to its current culture, pinpointing both strengths and weaknesses that the prospective ﬁrm might bring to the union. Assessing the management of the prospective organization is almost always qualitative and low-key. Conducting a management and cultural assessment as part of due diligence provides additional data points to the M/A decision-making process. These assessments help to set the leadership structure and responsibilities, understand the similarities and differences for planning integration, identify high potentials to focus on retention, pinpoint weak areas to assist in difﬁcult personnel decisions (i.e., releasing both the ineffective and the change-deﬁant) and create a benchmark for post-M/A evaluation. Sizing up the Management Team Assessing the management of the prospective organization is almost always qualitative and low-key. Managers complete a thorough assessment of their strategic ability and leadership characteristics. This information ensures both the competence of the management team and the legitimacy of its past performance. Several methods may be used to make valid inferences: • First, interviews are conducted with all decision makers, beginning with the CEO and continuing on to front-line managers. Examples of questions include: Who will support/block change? What changes would you make to the current organizational chart? Managers then complete objective assessments of their personality and cognitive abilities to provide greater depth to the analysis. Will This Relationship Last? Overlooking the human capital component of any business decision (especially M/As) is a step in the wrong direction. Although it does not come without its share of difﬁculties, such as maintaining conﬁdentiality and convincing owners that utilizing extra resources is expedient, this information is critical in reaching a successful decision. To borrow from my earlier analogy, life is a whole lot easier when you get to know the in-laws before the marriage. Why not take time to get to know the prospective family and do what’s necessary to ensure a healthy, long-lasting relationship? • CONTACT MERLE RIEPE AT 402.96 4.5515 OR MRIEPE@ SSGI.COM 6

Table of Contents Feed for the Digital Edition of SilverLink - Fall 2008

SilverLink - Fall 2008 Table of Contents Risk Management: Toto A Marriage Made to Last Cashier’s Check Fraud? Selection Validation Digital Tool Box When the Curtain Falls Lightning Strikes Increased Fuel Economy Employee Benefits: To Infinity & Beyond Securing Retiree Healthcare Private Client Services: Batter Up! Shaking Things Up STOLI Under Attack Client Spotlight: Bellevue University Internal Happenings: SilverStone Group Wellness Activities Group

SilverLink - Fall 2008

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