Mergers and acquisitions (M&A) are transformative opportunities that can unlock growth and innovation — but they’re also stressful and create uncertainty. At every level of the company, the news of M&A leaves people wondering what their future holds. The executive team is no exception, even when they’re the acquirer.
Historically, most M&A destroys value, according to a famous L.E.K. Consulting study examining over 25 years of data. What’s less recognized is the toll M&A takes on CEOs and their leadership teams, who can easily buckle under the stress and lose effectiveness, trust and unity. And because these leaders often can’t be as transparent as they’d like, their teams can also lose trust in them. Meanwhile, the day-to-day work of running the business suffers because everyone is distracted, gossiping and fearful — perhaps even looking for a new job.
The M&A process requires many decisions based on data, market practices and strategic principles, including identifying M&A targets, conducting due diligence, and arranging financing. But all of that depends on having a leadership team that’s unified, focused, and able to make smart decisions despite stress. The right leadership team coach, working alongside your top executives as they navigate the M&A process, can improve the odds of successful M&A and lasting growth.
Let’s explore what coaching during M&A entails, why it helps leadership teams perform better, and how coaching applies at different stages of a deal.
3 Benefits of Coaching for Leadership Teams During M&A
Coaching plays a crucial role in supporting leadership teams during the challenging process of M&A. A deal can alter a company’s entire culture, even if they’re the ones acquiring, because of the amount of change involved, the stress for senior leaders and the all-too-common lack of attention to human needs because of the business’ needs.
By providing guidance, insight and structure, coaching helps leadership teams navigate the complexities of deal-making, work through fears and apprehensions, and unify everyone on shared goals. Here are three key benefits of coaching for leadership teams during M&A:
Improved Team Alignment
M&A is a time of great uncertainty. Coaching can help leadership team members anchor in shared objectives and develop a common language and framework for decision-making. Coaches create a safe and supportive environment where team members can openly express their thoughts, concerns and ideas.
By addressing areas of misalignment and facilitating dialogue, coaching helps leadership teams get back in alignment, streamline processes and maximize efficiency during the M&A process. Not only do executive team members work better together, they also start thinking about the enterprise’s needs and goals rather than solely their functional concerns.
Better Decision-Making
Leadership team coaching during the M&A process helps these executives align purpose and strategy for better decision-making despite ambiguity and rapid change. Coaches don’t make decisions for these teams, but they do help them recognize different perspectives, evaluate risks, and identify opportunities — all rooted in their team’s purpose and goals.
This improved decision-making capability enables leadership teams to navigate the complexities of M&A with confidence. For M&A deals that change the makeup of the executive team, this purpose-driven decision making can help newcomers understand why decisions are made and how to contribute.
Strengthened Team Performance
Through coaching, leaders develop stronger relationships and build trust, empowering them to then deliver better results for the existing business and the post-deal business. Coaches can help these teams address conflicts, improve communication and embrace collaboration, even as business dynamics shift rapidly.
Because M&A is so disruptive, teams need to be unified in purpose and place trust in each other. Otherwise, instead of a team, you’ll have a collective of disparate individuals reacting out of fear and pursuing their own agendas. But with the right coaching support, these teams stand together, navigate change internally and help the broader organization embrace the opportunities created by M&A.
How Coaching Helps at Each Stage of M&A
Coaching can help executive teams at any stage of M&A, especially when it comes to trust issues or working together as a unified team through uncertainty and rapidly changing conditions. Here is how a coaching engagement might subtly shift depending on the situation.
Before M&A
Before a merger, coaching often focuses on helping these top executives manage themselves and regulate their emotions in the face of ambiguity. In this stage, there’s often a combination of team coaching and one-on-one executive coaching because people need a place to feel safe, talk through their discomfort and fears, and figure out how they can still show up effectively.
Leaders can experience high stress during this liminal period of extreme change combined with limited information and lots of uncertainty. In essence, the old world is over, but the new world hasn’t yet begun because the M&A is still unofficial or in progress.
This stage can be very personal for executives. Coaches will help them work through those concerns, redirect them back to the team and explore how they can self-regulate and excel as a part of the broader group.
During M&A
Top executives are often the only people who truly know the scope of change that’s occurring — or about to happen — in the midst of M&A. This can be stressful because they can’t always be as transparent with colleagues and reports as they’d like to be. Meanwhile, the M&A process itself is ever-changing and often volatile, adding stress as these leaders attempt to keep up. Living in that ambiguity can be truly challenging. Throughout this process, the business needs to keep functioning, essentially doubling the work for these leadership teams.
Coaching at this stage takes a few forms. One-on-one executive coaching can help clients manage their stress and uncertainty without creating additional complexity and challenges for their peers. Leadership team coaching, meanwhile, can be a partner in the room as the group navigates the daily challenges and attempts to get the M&A process to the finish line.
These coaches can also counsel on how to be transparent and communicative with the rest of the organization while still keeping privileged information private. No matter how phenomenal and sophisticated an executive team is, they’re human. And under stress, they’re more likely to slip up and gossip, lose their cool or fall out of alignment because they’re exhausted and overwhelmed.
After M&A
Not everything about coaching changes after a merger or acquisition. Leadership team coaching still includes a focus on defining team purpose, for example, or discussing what the team needs to deliver for the business over the next six months.
But after a merger, there’s less time in private coaching conversations and more time spent with team-level conversations where feelings can be aired openly. Coaches work to surface any unaddressed issues and reduce disruptive noise. Instead of self-managing fears and uncertainties, team members start owning those feelings with their peers and working through them.
Why Gossip Is the Enemy During M&A
One of the biggest dangers facing executive leadership teams during M&A is gossip. M&A is messy and noisy enough without half-truths and mistaken information taking hold, amplifying people’s fears and disrupting the workplace.
Coaches will ask top leaders, “What is the gossip?” They don’t ask to get people in trouble. After all, gossip is people filling in the blanks when they don’t have answers — and that will be most of your workforce. But even when done with the best of intentions, gossip will create dissension and wreak havoc on the culture. It’s the executive team’s job both to address such gossip and to avoid contributing to it in any way.
A quality coaching engagement will broach this topic during interviews with the senior team and elsewhere. By asking about gossip, coaches can start to identify themes or patterns, surface them in the coaching engagement and quickly address them.
The best way to prevent gossip is by addressing the gap between the old business (before M&A) and the new business (after M&A) — especially when you’re in the midst of the deal and everything is up in the air. Executive teams can’t avoid this ambiguity, and coaches won’t let them. They’ll ask questions like, “What was the old world? What were the norms? What did the work look like?”
From there, coaches can help executive teams draw a contrast to the new world the business is entering. These questions include: “How is the work changing? What about the norms? How will we measure success?” This time of liminality is crucial to get right, as people can struggle with the uncertainty and seeming tug of war when a company is between the old and impending realities.
M&A is a team effort. Just as your leadership team will bring in consultants to navigate the tactical aspects of M&A, consider how high-quality coaching can help your top executives navigate the psychological and trust challenges of M&A.
Learn how Bright Arrow Coaching can help your leadership team navigate M&A and come out stronger on the other side.
