IA Helps Two Companies Realize the Full Value of a Merger
Abt Associates turns to Interaction Associates to realize its vision - and the successful financial return - of its merger.
Abt Associates, a global organization which provides high-quality research, technical assistance, and consulting services to governments, businesses, and private organizations, acquired a specialized research firm. At the time of the acquisition, and for several years thereafter, the acquired firm continued to operate independently, and with as much autonomy as before the acquisition. Its leadership was pleased with its contribution to Abt Associates, were invited to senior leadership team meetings and activities, and continued to prosper. At the same time, its leaders did not see the firm as fully integrated, and felt they were more “informed about” high-level decisions instead of participating in them.
This situation began to change when a new CEO at Abt Associates introduced a new leadership strategy. Her vision called for the combined company to grow from $150M – $600M over three years. Under this new plan, the acquired firm was challenged to double its revenue contribution. This firm's management team had great pride in its organization, believed it had always been successful, and resisted the new requirements.
How Interaction Associates Helped
It was clear that there was an overlap in the kind of work each company was doing, and their mission and values were aligned. But the autonomy of the acquired company had promoted a lack of engagement with its new parent company. Its leaders did not feel fully valued, and were not really thinking or operating as a part of the larger family. Although the firm had agreed to the acquisition, the combination of the firms wasn’t working at the level of collaboration and interdependence essential to fully serve the overall business.
Interaction Associates facilitated a series of six meetings over nine months between Abt Associates and the acquired company’s senior leaders. The person who was to be asked to lead the emerging new entity was a part of these sessions. Feelings about the mutual respect of each company’s leaders were surfaced and dealt with in a productive manner. The leaders worked together to forge agreements about collaborating in a way that ultimately would make the overall business stronger and more financially profitable.
Return on Involvement
The facilitated meeting series conducted by Interaction Associates effectively aligned the two companies. There was a change of leadership at the acquired firm without acrimony. The organizations successfully transitioned to become a genuinely merged pair of companies. A cultural shift had taken place and a new identity was in the making.
Study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%. Almost always the actual deliverable of the acquisition — a new optimal value for the company — is never achieved. The acquired company doesn’t ever really accept that it is a part of the parent company, and the two never become truly interdependent. A facilitated series of in-depth conversations, in this case, allowed an evolution of the mindset of the senior leaders of the two companies. It showed that, even years after an original acquisition, it is possible to achieve success. Cultural differences and cultural shifts can be articulated and something new and dynamic given a chance to be born out of a merger or acquisition.
IA Services Provided
High-stakes facilitation services.