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While all employees should be part of this process, those who deal with the firms‟ customers should
receive special attention. We saw how Cisco moves quickly to retain key salespeople and reassure
important customers that the merger will only improve product offerings and services. In contrast, the
1997 merger between Franklin Planner and Covey Systems failed to heed this advice. Combining
sales forces was seen as a key source of synergy, but the company was unsuccessful in merging the
two compensation programs.
Divisions were especially strong within the company‟s 1,700-person sales force, which marketed
its seminars and training sessions. Former Covey salespeople got higher bonuses than Franklin
staffers. Covey employees also kept their free medical coverage, while Franklin‟s had to pay part
of their premiums.
—BusinessWeek, November 8, 1999, 125
This situation created such sniping by sales reps on both sides that productivity plunged.
The implementation plan must focus management resources on those areas at the root of the deal‟s
synergies. If value is going to be created, it will only be by executing on those aspects of the deal that
were the original rationale for merging. Without a plan, it is too easy for managers to get bogged down
in details of the implementation that have little marginal impact on shareholder wealth. In the failed
AT&T/NCR merger, the hoped-for technological synergies between telecommunications and
computers never materialized as managers worried more about creating a team environment.
In many cases, the disappointing performance of mergers can be traced to a failure to account for
cultural differences between organizations. These differences can be based in corporate culture—or
national culture in the case of cross-border deals. In many transactions, both corporate and national
cultural differences are present. Because they are intangible and difficult to measure, cultural
differences are often ignored in the preacquisition due diligence. This is unfortunate since they can
ultimately be the most costly aspect of the implementation process. In mergers where the firms have
similar cultures, the rapid combination of the two organizations can actually be easier. However,
where there are large cultural differences, executives should consider keeping the entities separate for
some time period. This allows each to operate comfortably within its own culture while at the same
time learning to appreciate the strengths and weaknesses of the cultural differences between the
organizations. Such an arrangement may delay the realization of certain synergies, but in the end is the
most rational plan. The key is that culture can have a huge impact on value (both positive and
negative), and therefore needs to be part of the planning process from the very beginning—even
before any acquisition offer is made.
To ensure success, the postmerger implementation process must be carefully planned and executed.
Even when this is done, there will undoubtedly be surprises and unanticipated problems. However, a
well-thought-out plan should minimize their negative impact. The most important parts of the plan are
speed and communication, which are critical weapons in the fight against successful implementation‟s
main enemies—uncertainty, anxiety, and an inevitable drop in productivity. A plan conceived and
implemented swiftly by the firms‟ executives, with their full and active leadership, improves the
chances for a successful transition. As always, we urge acquirers to seek the advice of knowledgeable
experts on the implementation process.