Mitigating merger mania

The ‘M’ word is currently all the rage – especially in professional services (and the law in particular) as firms respond to the new competitive market place for ownership in the UK and a continuing low growth economy. According to a recent survey, 50% of law firms questioned have either put in or plan to put in place a new structure to allow non-lawyer ownership. In a traditionally ultra- conservative sector, that smacks of dynamism.

But it is best not to get carried away, so here are some observations from experience on some of the pitfalls of mergers and how to avoid them. They apply not just to lawyers but all businesses contemplating the big M move.

There’s no such thing as a merger
In professional service circles, firms ‘merge’ almost 100% of the time. Nobody ever gets ‘taken over’ or ‘acquired’. In most cases this is a sop to the feelings of partners. From experience, in nearly every ‘merger’ game – at the end – one side invariably emerges from the deal changing room wearing the trousers (so to speak).

When big’uns acquire (sorry merge with) little’uns, those in the minority firm should never fool themselves (but some DO) that things will remain the same as before. They won’t. Nor should anyone else if you aren’t on the winning side.

Culture eats strategy for breakfast
One of Peter Drucker’s pithier comments has a particular resonance for mergers. Firms spend much expense and many hours of due diligence coming up with valuations, assessing financial and resource (mis)match-ups, systems compatibilities, client base analyses and making other assessments and decisions that fulfil the strategic imperative – quite often based around numbers.

I wonder how many mergers really put serious effort into assessing the most important intangible for Mr Drucker – the cultural fit (I think we know the answer to this)? Yes, it is difficult to pin down but there are methodologies out there for making a detailed comparison…if you decide to use them.

What about the morning after?
Yes, and as we’re speaking about all that effort that goes into analysing, deciding and doing the deal – how much grunt goes into the bit that follows, the waking up together on the first day of a new marriage and (hopefully) the next 50 metaphorical years? If you’ve seen most of the focus go on the ‘before’ – leaving the ‘after’ to be “sorted out later” (presumably by someone else) – then you’re not alone.

There isn’t a pill to take. Instead, there is a detailed post-merger plan with clear activities, responsibilities, time frames, budgets, resource and buy-in….and an awful lot of hard work to make it happen.

Exploding the body language myth

Here is a falsehood almost universally acknowledged as true.

Body language (Non Verbal Communication) and intonation are overwhelmingly the most influential factors in how we communicate. To be precise, 55% of ‘the message’ we deliver is down to NVC (the Visual), 38% is HOW we say things intonation etc. (the Vocal), and a mere 7% is gobbled up by the actual content of our messages (the Verbal).

Over the past 40-plus years, the number of times that this has been written, presented, or otherwise re-told is legion and has made it “true” – a ‘fast thinking’ effect that appears to do the work of Daniel Kahneman in ‘Thinking Fast and Slow’ proud.

So where did it all come from? Two research studies conducted by psychologist Albert Mehrabian in the late 60s both dealt with the communication of positive or negative emotions via single spoken words, like “dear” or “terrible”. People were asked to assess the credibility of these single words when delivered with elements that were often in conflict (e.g. “terrible” in a pleasant or happy tone). Mehrabian then combined the results of the two studies to obtain the ratio 55:38:7 that has not been validated by any further research.

Anybody spot the problem extrapolating from a limited study using one word to explore dissonance issues specifically…..into a universal truth about all communication?

Yes, quite. It isn’t the real world. I used to think about it in practice and doubted. For example, what would happen if I delivered a speech whose content was gobbledegook but with as much intonational and non verbal brio as I could muster? Presumably, I’d still be largely credible according to 55:38:7.

In an email to Max Atkinson, reproduced in Max’s excellent book ‘Lend Me Your Ears’, Mehrabian said: “I am obviously uncomfortable about misquotes of my work. From the very beginning I have tried to give people the correct limitations of my findings. Unfortunately the field of self-styled ‘corporate image consultants’ or ‘leadership consultants’ has numerous practitioners with very little psychological expertise”.

I prefer to see it this way. Excellent communication is a temple supported by three equally-sized pillars: our three Vs. For the temple to stay up, all three pillars have to be present and working well together, properly engineered if you like. Should any of them not be in proportion (or indeed dissonant), the structure risks collapse.

There are many other commentators who already have and will continue to debunk this body language myth that has become a seeming truth. Don’t you be fooled by its glib attraction.