Managing a successful merger

By Don Hinshaw President and ceo Monierlifetile Irvine, Ca.

THE TERM "successful merger" is I probably an oxymoron. In fact, many mergers fail. Fail doesn't mean that the companies go bankrupt, but typically what happens is that they don't meet the expectation of the architects of the deal.

In a merger, security is number one on the list. People can do arithmetic. So, if you're going to put two companies together, folks freak real fast. "Who's going to be first to lose his job?" "I've been here a long time. What's going to happen to me?" "Who is going to be the winning company?" "Are we going to be like Mercedes Benz or are we going to be like Chrysler?" "And who's going to control this thing?"

Bottom line is that when you're dealing with a merger, folks are worried and the job is always bigger than you think it's going to be.

Our company, Monierlifetile, was formed as a result of a merger between Monier Inc. and Boral Lifetile-both over $100 million companies, with l7 plants and 1,500 employees between the two. Two companies that were working at about 50Vo capacity utilization. Two companies whose cultures could not have been more radically different.

It would be like putting the Denver

Broncos and the Oakland Raiders in a room one morning and saying, "You guys are now one team." At trade shows, these two companies would make sure that they'd go down different aisles so they wouldn't run into one another. Two companies that hated each other.

But thanks to a solid action plan and a proactive management team, today we are leading the new construction and re-roof markets with America's top selling roof tile.

So where do you start? First, one of the most important things you can do-and no one does this-is to put your head down and focus on the notso-obvious, the nuts and bolts. It's the boring stuff that makes mergers work.

I like to think of the process in eight steps that can be divided into three phases, beginning with:

I. PHASE I (30 days)

(l) Leadership. Somebody has to take charge, and you've got to sound like you know what you're talking about. You've got to talk about why you're merging, what's it going to do for the company, and what's it going to do for the employees.

They want to know "what's it going to do for me?" And if they're not convinced it's a good thing, you've got a problem. The vision must be communicated and someone needs to inspire passion to get people behind the new company.

The first day of the merger, every manager from both companies came in at 8:30 for what they thought was a company meeting. They just happened to meet in hotels about 200 yards apart, not knowing what was know-a common issue. our direct labor people, knowing their names. When I walk up and ask them, by name, how they're doing, I see their faces light up. about to be announced. At 10:00, one of the companies walked across the street, walked in the door, and the company that was in the room had a receiving line to welcome the people they'd always hated. We were there for 24 hours talking about the direction, the vision, the purpose and the benefits.

(4) Initial Positioning and Communications. Change the corporate identity within the first two weeks. Immediately, within the first two days, all old posters, flyers, brochures, binders and signs have to come down and off people's shelves. Get the new logo up and running right away.

(7) Execution. If you actually do all the boring stuff-the nuts and bolts-and work on developing a new culture, you'll find yourself with a successful merger and a thriving new corporate culture.

(2) Micro Pre-planning. Pick your executive team early in the pre-planning process. We went underground a week before the merger was announced and laid out everything that we were going to do the first 30 days, hour by hour.

Address employees' concerns head on. It buys a lot of credibility. Bring up controversial issues before employees do, even just to let them know that while you may not have all the answers today, here's how you're going to handle it. Don't hide from concerns. And make sure the team stands as one.

(3) Initial Launch. You need to put together an announcement schedule. What are you doing? Who, what, when, where? Make sure your customers don't know what's going down before the sales reps

Then you've got to get out and talk to people. We did this by going on a road show and visiting our employees, customers and vendors. We spent a week and a half meeting employees at the plants and giving them the new communication plan, so everyone knew exactly what we were doing and why. We set up a voicemail mailbox that folks could call and leave questions anonymously. We started internal newsletters. It's the little things that start making a difference.

(5) Assessment. While you're still in the first 30 days, do an analysis to determine where the two companies are in the marketplace. Identify strengths and weaknesses. Determine who stays, who goes. Get away from trying to balance keeping this many from this company and this many from that company. Make decisions based on skill and bring in a few folks from the outside to balance the thinking.

II. PHASE 2 (90 days)

(6) Rationalization and Gap Plan. This is where you get into deeper consolidation, where you start to look at how many products, plants and people you have and get your executives involved, really involved. When I go through manufacturing plants, I work on knowing some of

III. PHASE 3

(8)Tree Trimming, Reassess and Modify Plan. I call this final phase the forever stage. The retraining, the reassessing, the modifying of strategic plans and communications, this never stops. If you are successful with your merger, you've got to maintain your new culture by constantly reassessing the environment.

In addition to overseeing the 1997 merger betvveen concrete roof tile manufacturers Monier and Boral L{etile, Don Hinshaw has worked with corporations such as Owens Corning, Levolor, Del M ar/B eat ric e and Samsonite.