Tip to Succeed after a Merger or Acquisition

Due diligence has been done, the documents have been signed and the money has changed hands. Now what? With an increasing number of mergers and acquisitions occurring in the healthcare industry, and more anticipated, many are finding that the legal and financial issues are just the beginning of the potential angst and challenges involved. It’s what happens after the formalities have been taken care of that can make or break a successful union.
 
Tripp Watson, an entrepreneur attorney, based in the Birmingham, Ala., area, says: “One of the most overlooked aspects in a merger is office culture. If one practice is laid back and another is very professional, it can immediately cause tension and issues, especially because individuals are forced to be around coworkers they had not originally anticipated or even wanted.”
 
It’s easy to get “caught up in the numbers and the legal issues,” he says. But, that’s just the beginning.
 
In short: success depends primarily on the ability to effectively merge two or more cultures. Culture, as they say, eats strategy for lunch!
 
Culture is key
 
Cultural issues are key, agrees Lisa Anderson, operations strategist with LMA Consulting Group, Inc., in Lancaster, Pa. “In my 20 years of experience both as a practitioner and as a vice president of operations and business consultant across multiple industries, I’ve seen that 80 percent of mergers and acquisitions fail to achieve the intended results,” she says. Those that do succeed share certain commonalities:

• They have exceptional leadership. “I’ve yet to see a merger or acquisition’s success relate to product, strategy etc. In 100 percent of the cases, it boils down to leadership,” she says.
• They practice upfront communication. “As simple as this sounds, it’s rarely done,” she says. “People want to know how the merger or acquisition will impact them. If they know you are being upfront with them and keeping them in the loop, you’ll have support.” 
• They don’t make changes immediately. Take the time to bring employees, patients and suppliers into the loop, she advises.

 
Importantly, mergers and acquisitions should be approached realistically. There will be bumps in the road – that’s to be expected. But, establishing a climate of open communication and flexibility can help to navigate those bumps.
 
Move quickly!
 
Dr. Doug Wisor is president of National Spine & Pain Centers, the result of a merger between Capital Spine & Pain Centers and The Spine Center, Virginia and Maryland’s leading interventional pain management practices. Change, he says, brings challenges.
 
“There’s always going to be a fear of the unknown and a sense of longing for the past,” he acknowledges. But, he adds, referring to the current healthcare climate: “The reality is that, whether you like it or not, change has been thrust upon us; we can sit here on our little dinghy and let the waves just cast us asunder or we can get in the boat and row just as fast as we can.”
 
Rowing fast is important, says Joe Aberger, president of Pritchett, LP, a merger integration consulting firm based in Dallas. Like removing a band-aid, quick and potentially painful, is generally the best approach. “The single best predictor of merger integration success is the length of the transition period,” he says. “The longer you take to integrate, the closer you live to the edge. Disappointing deals correlate highly with slow consolidation.”
 
Best practice advice
 
There are a number of important considerations and practices that can help ensure a successful transition, says Roberta Matuson, CEO of Matuson Consulting, based in the Boston area, and the author of The Magnetic Workplace (Nicholas Brealey, 2013). She recommends three best practices to ensure a successful consolidation:
 

1. Assess the talent. There is likely to be duplication so it is important to determine who will take on which roles and who may need to be either redeployed or transitioned out of the organization. Considering these issues sooner, rather than later, will help prevent the confusion and uncertainty that often occurs when businesses merge, she says.
2. Increase communication. It’s always a good idea to have clear communication with employees. However, notes Matuson, it’s critical that this occurs after a merger or acquisition. Communication needs to be frequent and ongoing and employees need to have an opportunity to share concerns or ask questions in an open, trusting environment. Matuson suggests setting up a separate phone line so people can call to address any questions they might have about the changes that have occurred – an online forum can also provide a good opportunity to ask questions and share information.
3. Be honest. Telling people that no one is going to lose their job when you ar fairly certain some people will be asked to leave will do little to help you merge the cultures, says Matuson. Be upfront, also, about the potential painfulness of change and the likelihood that many staff members will be asked to do things differently than in the past.

 
Cultural issues also relate to how staff will be assimilated and managed, the amount of control and decision-making authority and involvement physicians will have and even how the new entity plans to proceed in a transition from a fee for service model.
 
Mergers and acquisitions can be, and often are, successful. But the odds of success can be boosted by clearly identifying desired outcomes, understanding the details and focusing on the all-important element of cultural alignment.