Over the last decade, the industry has seen a lot of buyouts and consolidation. This has been particularly prevalent in the consulting market, with large international firms wishing to gain a foothold in the UK infrastructure and built environment sectors.
Organic growth may work for some. But mergers and acquisitions can quickly increase turnover and market share.
One notable acquisition that was recently announced is CBRE Group acquiring a 60% stake in Turner & Townsend, a deal worth c£960m. This follows a trend of North American firms purchasing UK consulting businesses, with Hoare Lea also being purchased by Tetra Tech in the last fortnight.
Mergers and acquisitions may make good business sense for the shareholders concerned. But it is crucial to remember the significant impact they have on staff. Major changes will follow and not everyone will be pleased with the shift.
For competitors this is a prime opportunity to prey on disgruntled employees.
Your intellectual capital is what has made the company such an attractive buy. So, what can you do to minimise disruption?
1. Retaining key members of the team
As soon as the first whispers of a buy-out start making the rounds, staff are going to be considering their options. You need to decide straight off the bat who is critical to the business.
Most M&A models include a retention incentive plan. This is usually in the form of a two or three-year “golden handcuffs” scheme to encourage senior team members to remain.
This should be agreed with key staff immediately, before any announcements to the wider company. You must take action before they do.
2. Structural and Leadership changes
“Merger Syndrome” is the presence of uncertainty and anxiety-raising speculation around change.
Changes need to happen quick. It’s no good to have a vague plan for the next three years.
After the Jacobs CH2M buy out was approved, several high profile CH2M directors parted ways with the company. This happened almost immediately, including their European Managing Director.
Staff need clear and consistent communication to minimise uncertainty. If your employees know what is going on, they are far less likely to consider their plan B’s. It is important to communicate as often as possible to keep everyone in the loop.
3. Culture and Brand
Likewise, the brand and culture of the new company should be established. To some, the brand and reputation of a company are of significant value. For instance, when Atkins was bought by SNC, it was a highly regarded name in the UK engineering market. SNC chose to blend the two brand names to SNC-Lavalin Atkins.
In contrast when AECOM purchased URS, the URS brand was replaced with the AECOM brand within months of the deal going through.
Rebranding to form one united company can reduce the impact of a “them and us” culture developing. Equally the relative brand strengths in different markets and geographies need to be considered.
When it comes to culture and values, the prevailing culture of the acquired firm often shifts over the next few years to that of the acquiring firm. This will inevitably lead to some fallout, with staff in the acquired firm who were very in tune with it’s culture seeking to move to another organisation whose values are more closely aligned to their own.
Whichever direction the organisation moves in, transparency and open communication is key. Discuss options with staff, hold forums and allow them to make suggestions.
Unfortunately, redundancies are an inevitable outcome of mergers and acquisitions. You can’t keep two sets of group management.
Communication and speed are important, it is imperative that redundancies are treated with respect.
At the end of the day, you are building a new business with a new reputation. If you leave a bad taste with employees you have to let go, they won’t keep their opinions to themselves.