#AWAPAC Recap: How Not to F*ck up a Merger

 

‘It’s the small things that make people leave’


Business mergers are a fact of life in the ever-evolving marketing industry, but what makes them tick? In a session at Advertising Week APAC four industry leaders gave their tips on how to make them stick.

“I think even a good merger is a bloody messy one. There’s no two ways about that,” admits Laura Aldington, reflecting on her recent experience bringing together two leading Australian ad agencies.

She adds: “It’s the baggage that goes with a merger - the word strikes fear into the heart of everyone. No-one says ‘merger, amazing, career enhancing opportunities’.”

For anyone who has been through the forced marriage of two companies, these words will resonate. But as the industry continues to evolve there will be more, so, first and foremost, is there really such a thing as a merger, or is it a takeover?

Two of the panelists on the ‘How Not to F*ck Up a Merger’ panel at Advertising Week APAC declared that there were no mergers, it always became a takeover.

“It’s not always the business with the size and scale that leads,” says Verizon Media Managing Director Paul Sigaloff. “Bringing it back to the AOL merger with Yahoo, it ended up being a bit of a reverse takeover. Although the leader was from AOL beneath that, culturally and from a process perspective it was very much a Yahoo takeover.”

However the other two panelists disagreed, with Wavemaker CEO Peter Vogel arguing it was often a matter of perception for staff.

He says: “There can be such a thing as successful mergers, and I’ve been through two. People have different perceptions and the things that influence that are the size of the two entities coming together, if one is a lot larger than the other, and the leadership - is it a balanced leadership between the two entities. Obviously the name you end up with also helps.”

The group identified several areas to consider for anyone embarking on bringing businesses together.

Communication

KPMG partner Karen Halligan recently completed due diligence for an agency merger, looking at what goes wrong most often. Communication was top of her list.

“It’s the biggest one - what do you tell people and how when in an environment where they feel uncertain?” she explains. “It’s also about not doing everything at the one time - avoid telling them about new staff, clients, systems at the same time, it helps.”

She recounted a story of where clients had been put ahead of the staff in the communication of an acquisition: “The client, who I was close to, rang me and said ‘so are you staying then?’. I said, ‘what do you mean?’ and she said ‘your agency just got bought.’ It was the first I’d heard about it.

“It’s that balance of who do you tell first - the clients because you have to shore them up, or the staff because you need to shore them up.”

Reflecting on her experience bringing creative agencies Host and Havas together in Sydney, Aldington said communication had also been her biggest learning curve.

She explained: “When you’re so busy and trying to do your day job and the merger at the same time, you forget how many times you have to say the things you’ve said for people who are feeling fearful and anxious to hear them.

“When you think you’ve said it enough times you need to say it twice as many times. People create their own narratives and tell the stories they want to tell.”

Vogel, who oversaw the combining of GroupM agencies MEC and Maxus to form Wavemaker across APAC, said one major headache for him was being on different timezones from the head offices in New York and London. Often, he said, staff would wake up to find out vital information about the merger which had been announced overnight, and leaked to the trade press.

Handling redundancies

Inevitably two businesses coming together will mean redundancies due to duplication of roles. There were two schools of thought on how to handle this process.

As Host/Havas CEO Aldington explains: “There are two schools of thought, one is to go in and swing the axe early, but we took a more considered approach. That came down to creating as much stability for as long as possible - we had clients we were conscious of moving through that process quite slowly.

“It has its downsides as well. We lived with some duplication for a while and that came with some problems - a lingering anxiety if you haven’t made a call people know will come at some point, and in the end we didn’t lose any clients, but there are times I wish I had wielded the axe a little quicker.”

Verizon Media MD Sigaloff argues it should be the other way round: “Do it with as much integrity and humility as possible and really as quickly as possible, as that whole inertia experience is not a pleasant one.

“If you’ve experienced a company being bought it’s not pleasant, and you normally have a period of at least 6 months in the lead up where there is inaction. So speed to action is really important.”

On how to decide who to take for various positions, Sigaloff urges people to push back against the idea of quotas for the number of people from each side.

“I’ve always been governed by the idea of getting the best person for the role, and I’ve worked through regimes where I’ve been given ratios of getting certain people from certain departments, and that absolutely doesn’t work,” he explains.

“If you’re governed by individual’s capability and how they strategically fit into the business has to be the driver.”

Sweat the small stuff

According to KPMG’s Halligan, the main triggers for people leaving during mergers are not what you would expect.

She explains: “Changing someone’s notice period, the maternity leave policy, it’s these little things you don’t often see that become the triggers that make people really unsettled.”

Aldington agreed, recalling the questions she was given through an anonymous question box left in the office during the merger process: “We pulled the first thing out - it was ‘please can you put a scoop in the nut jar, I don’t like people using their hands’.

“That’s about control for me, I have no control over my job, and it’s understandable. The second question was ‘are we still going to have a cheese plate on a Friday?’.

“That was a big learning for us about culture and who builds culture, it’s not the stuff you say you’re going to do but it’s the stuff that happens on the floor.”

Vogel says people are often more concerned with how they are affected, and that is something which gets overlooked in the wash, especially in global tie-ups.

He explains: “We’re a service industry and it’s all about people. No-one chose to work for the agency or do the merger themselves, change their focus and the opportunity it will bring and keep getting people to focus on that.

“The only reason our merger was a success in Australia was the people - they carried and supported and carried a big part of the load. It’s nothing to do with the strategy sent down from global, it’s all about the people.”

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