How to Mitigate ‘Merger Syndrome’ in M&As

Overview

The group most impacted during times of organizational change – especially transformations like mergers & acquisitions (M&As) – are a company’s employees. These stakeholders can experience all types of disruptions to their organizational structure, work scope, and collegial cohorts – which can generate significant stress & detriment to their employee experience (EX).

One common issue that emerges during M&As is ‘merger syndrome’ – described as “the stress, anxiety, and crisis management [that] employees demonstrate during a merger & acquisition” (Source: Attir 2018). Such a concept can derail the progress made during these large-scale transactions – especially in the EX realm. So the best way to address ‘merger syndrome’ is by creating a proactive, data-driven integration strategy (Source: Clark 2023a).

Repercussions of ‘Merger Syndrome’

In order to effectively address ‘merger syndrome’, business leaders have to fully understand its repercussions at two levels: the employee & organizational level.

Employee-Level

At the employee level, ‘merger syndrome’ can have direct, negative impacts on various EX aspects. The concept’s occurrence can bring about anxiety and stress that impacts stakeholder’s mental and emotional wellbeing – which thereby impacts their degree of motivation and employee engagement (Source: Salt 2016). This can be detrimental for employee outcomes – since the staff’s ability to focus on and complete their work is compromised (Source: Clark 2023b). Plus, uncertainty about their future job security could spark “an increase in employees searching for job alternatives” (Source: Salt 2016) and potential turnover contagion.

Organizational-Level

Similarly, ‘merger syndrome’ can have a sizeable impact at the organizational level. Given the attempts to combine and unify two distinct organizational cultures, some degree of ‘culture conflict’ will occur – “making cooperation more difficult, particularly from employees of the acquired company” (Source: Attir 2018). This ‘culture conflict’ can give way to miscommunication, siloed mentality, and ‘us vs. them’ tribalism – all of which can disrupt productivity & negatively impact client delivery (Source: Clark 2023a).

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Recommended, Proactive Approaches

In order to effectively address ‘merger syndrome’, companies need to take a proactive (rather than reactive) approach at both the employee & organizational levels.

Employee-Level

An integral component of any proactive strategy is a focus on ‘employee voice’. Defined as “the way people communicate their views to their employer and influence matters that affect them at work” (Source: CIPD 2022), this concept can provide real-time insights about stakeholders’ concerns/fears regarding an upcoming M&A. So companies should design and implement (additional) mechanisms that allow stakeholders to freely voice their feedback – which will pinpoint any primary EX areas that leaders need to address/prioritize.

Additionally, every company needs to prepare a detailed change management strategy before announcing any M&A transaction. Unlike a standard communications plan, this strategic framework needs to map-out key communication components scheduled before, during, and after the M&A (Source: Clark 2023a). Not only will this keep impacted stakeholders informed throughout the process, but it can help mitigate any job security concerns that could arise from ‘merger syndrome’.

Organizational-Level

On an organizational level, it’s important for business leaders to proactively tackle any potential ‘culture conflict’ head-on. Before an M&A is announced, it’s best for the acquiring company to have a well-defined set of core values – as well as branded swag. These two organizational culture elements will be critical for helping “foster a shared company affiliation/identity” (Source: Clark 2023b) for the acquired staff. Business leaders can invite acquired staff to onboarding/workshops where they can learn about the acquiring company’s values, obtain facetime with their leadership, and receive company-branded swag (e.g., notebooks, coffee mugs). This transparent approach can help prevent the ‘culture conflict’ aspects of ‘merger syndrome’ from emerging.

In addition, leaders of the M&A’s acquiring company should proactively organize networking opportunities. A common (yet damaging) byproduct of any M&A is a lack of communication and collaboration between the acquired and acquiring teams; this can lead to the ‘us vs. them’ mentality of ‘merger syndrome’. However, cross-functional networking opportunities are proven methods of fostering collaboration and interaction. Whether they be formal (e.g., mentoring programs) or informal (e.g., on-site social mixers) in nature, these activities help create a “workplace culture that encourages peer-to-peer interactions” (Source: Clark 2022) that can mitigate the siloed mentality and turnover contagion sparked by ‘merger syndrome’.

Conclusion

‘Merger syndrome’ is bound to emerge during any M&A transaction. But while it can be difficult to prevent, it can be effectively mitigated & addressed with proactive planning. Designing a data-driven, proactive approach to tackle this issue can help companies anticipate and address any post-merger employee integration challenges that may occur; it can also help them identify any potential pre-M&A integration opportunities. Traditional, reactive methods are not effective – since they don’t address or resolve the underlying factors of ‘merger syndrome’. So a proactive approach (shaped by stakeholder input) is critical to mitigate this concept – before it escalates into something problematic.