Surviving an Acquisition


In the news these past few weeks there have been some significant announcements related to acquisitions across the Caribbean region.

One major acquisition that was announced for the first time was that of Neal and Massy’s takeover of BS&T — Barbados’ biggest company.

Also in the news is the announcement that the principals of DB&G (which was acquired by Scotiabank) are leaving the company at the end of June.

Although the LIAT/Caribbean Star merger has not been in the news of late, the sale has still not been completed, although it has been scheduled to happen on June 15th.

The common factor between all three actions is that they were all announced as “mergers of equals.”

The result?

They are actually turning out to be acquisitions, and not mergers.

Lest anyone think that this is a strange occurrence, history is littered with examples of announced mergers that turned out to actually be acquisitions, including AOL-TimeWarner, Daimler-Chrysler, HewlettPackard/Compaq and Sports Authority/Gart.

The fact is that executives almost always start out using merger language in public, unless the takeover is hostile. In fact, they are undergoing acquisitions, especially with respect to the corporate cultures.

It is not too hard to tell who the cultural winner is — the executives of the company being acquired usually don’t last very long.

In a Framework article entitled “Merger of Equals? Equal Shmequal!” by Amie Devero, she argued that a merger is not possible, in cultural terms. (The article can be downloaded by sending email to Also, the recent April 2007 Harvard Business Review article entitled Human Due Diligence makes the point that companies often fail to recognize the “cultural acquirer” when undertaking these activities, to their detriment.

While these questions are certainly of issue to shareholders, it is the employees that bear the brunt of initial miscommunication.

They hear talk of “a merger of equals” “nothing will change,” “no layoffs, ” “business as usual” and “the same management will continue.” Given the public track record of mergers to date, they have every reason to be concerned.


When senior management insists that a merger of equals is underway it may be good for shareholders to hear and believe that the executives between the two companies are planning to harmoniously co-exist in some way. However, it is often a misleading statement for employees.

History shows that employees are much safer believing that a merger actually means that

  • each and every job function will be examined for possible overlaps, and that it is likely that at least some jobs will disappear
  • one company will be culturally dominant over the other
  • one set of executives will remain, while the other will depart
  • there will be major changes and new order will make itself known over time (after all, isn’t that the point of the exercise?)

This is not to say that these are bad outcomes — often they are the best things that can happen to the new, combined company. In the free market of management styles and approaches, let the best company and management team prevail.

However, the problem stems from the fact that most executives in both companies start out by mis-leading their people.

In the very way they announce the “merger” their own people can detect the lie.

It’s a little like a bad version of the Brady Bunch — each parent tell their children that a marriage is about to happen to join two families together, and… “by the way… in case you kids were wondering… nothing will change.”

Executives the world over leading acquisitions persist in painting an ultra-rosy picture of the future for their employees. Their inauthenticity is palpable.

It seems that often, they buy into their own “story,” an even in the colossal failures like AOL-TimeWarner and Daimler-Chrysler, they seem to be able to maintain a scary insistence that all is well, even when everyone in the real world knows that it is not.

What can executives do differently?

In a prior blog I wrote about what I called “High Tone Managers.” These managers focus on being relentlessly positive, to the point that their employees come to distrust everything they say because they are the ones saying it.

An executive leading an acquisition would do much better by being authentic and saying some version of the following, if true:

  • we are about to undergo a very difficult change
  • this is a friendly acquisition (if it is)
  • the odds are against us being successful
  • we think the risk is worth it
  • the culture that we intend to create will hopefully take the best of both companies
  • some jobs will be retrenched, but we are hoping that no people will be forced to leave the company
  • the reasons we are doing this is ….
  • it will take all of us working together to pull it off

The point here is that an acquisition is a shock, and that people will go through the changes they need to go through in order to adapt to it. It is not unlike the 5 phases of grief a survivor journeys through upon the death of a loved one, as defined by Elizabeth Kubler-Ross: Denial, Anger, Bargaining, Depression, Acceptance.

Employees need to be helped to go through these stages as quickly as possible, en masse. Their feelings at each point must be validated, acknowledged and given room to live, if even for an instant.

If executives do their job well, employees can be like soldiers rallying to a cause that is greater than themselves.

However, if the job is done poorly, as it usually is, the result is that employees feel like victims who need to protect themselves from something terrible, that their own parents are inflicting upon them for their own benefit.

In Caribbean companies, the employee mood doesn’t get much worse than this.