Handling Cultural Issues in M&A Transactions
Mergers & Acquisitions have become an inevitable part of the growth of any modern corporation. The M&As create a transformation in the acquired entity and under this situation effective leadership plays an important role by reassuring and motivating the employees. There is a vast amount of academic literature available on the financial and strategic aspects of Mergers & Acquisitions. In this interview with Mr. Sanjay Kalra, Former CEO of Tech Mahindra, who specializes in turning around underperforming assets worldwide, we try to understand the cultural challenges resulting from M&A transactions.
Given the importance of Acquisitions and Joint Ventures in achieving growth it is important to manage cultural issues well. The cultural issues can make an acquisition highly successful or a big failure. A different approach is needed for every M&A depending on the circumstances. The challenges with M&As have changed in the past 20 years. With the advent of online media like Twitter, Facebook and other technological advances the consistency in communication had become even more important. Companies have moved from the era of “All hands meet” to “All hands call” and the younger generation is more courageous in asking questions. To effectively address these challenges the management has to “walk the talk” and demonstrate early results. The most important tenets for addressing difficult situations are honesty, integrity and consistency in communication. The communication efforts should result in a shared vision which finally drives the growth of the organization.
From the interview
"M&A is meaningful only when it serves some Strategic Purpose. The day a transaction is done, success depends on what you do after that, not on your pre-merger analysis and projections."
(On the driving the success of an M&A transaction)
"Meeting key customers and employees is an important step for acquiring services companies."
(On the cultural integration of the Merged entities)
“In communication there are 3 things of paramount importance: Honesty, Integrity and the Integrity of the message.”
(On importance of communication in ensuring success of M&A transactions)
“The most important thing in a Joint Venture is its exit criteria. It should be well defined in terms of specific events, timelines and buyout situations. These should be articulated clearly and should reflect reality.”
(On ensuring success of Joint Ventures)
“The leaders of two organizations forming a Joint Venture have to connect well with each other at the top level and they have to like each other for the JV to be successful.”
(On cultural challenges in Joint Ventures)
Mr. Sanjay Kalra is the former CEO of Tech Mahindra. His area of expertise lies in successfully turning around underperforming assets worldwide. He has successfully led many Acquisitions, Joint Ventures and Nutured Multiple Startups. Mr. Kalra is an alumnus of IIT Delhi 1985 Batch.