Mergers are a big deal. If you’ve taken the plunge and decided to merge with another company, you’ve no doubt put a whole load of work into making it successful. But how do you measure if a merger is successful or not?
You might also be wondering how soon you’ll be able to see and measure this success?
There is no simple answer to these questions. But in this article, we’ll try to help you determine the best way to measure the success of your merger, to hopefully set your mind at ease.
How long will it take to measure the success of a merger?
Let’s start with this question, because we know you will be really eager to know when you’ll start seeing the fruits of your labour.
It depends a little bit on the nature of your business, and it is important to know that revenue isn’t the only important thing here. You could buy a company with a massive revenue and see an increase in gross profit immediately, but that doesn’t mean you can maintain it, or that cracks that were formed during the merging of two companies won’t rear their heads later and have a negative impact.
It’s best to judge the success of your merger instead by how cohesively your team is working as one.
If your teams are relatively small, you might find the culture shift easy, and opposition minimal. This could mean your merger is successful and working well within a couple of months.
If the businesses are large and complex, it can take years to complete the merger. Still, some cohesive working should be occurring within the first few months, and everything should be much smoother at the six month mark.
Most companies see their expected outcomes by the end of the second year, but this takes hard work, ambition, dedication, and proper management and measurement to make this happen.
When we say proper measurement, we mean the use of real metrics to determine the success of your merger. Beneath the next heading, we’ll talk more about what these might be.
How do I measure the success of our merger?
There are a few key ways to measure the success of a merger, some obvious and some not so. We’ll start with the ways you have probably thought of and move on to the metrics you may not have thought of, but are equally as important.
Revenue
One of the reasons you probably merged is because you want to increase your revenue. Revenue is of course a key indicator of your success. It should rise and continue to rise, as you have acquired more assets and a bigger team.
Number of clients
The number of clients you have should increase, even if it is only slightly. Perhaps the company you swallowed only had a few customers, but it probably had at least some. Now that you’re a larger company – perhaps in several geographical locations – you should find your business expanding in terms of clients.
Client complaints
It’s not unusual to acquire a company where there are many client complaints. If they were doing really well, they wouldn’t have sold, right? But you should see these complaints decrease over time, as your merger advances and your work becomes more streamlined.
New client quality
You have what is effectively a new company. You’re bigger now, and should be better known. You have strong staff in the right places, and they’re all working towards the same goal. So you should see some strong new business, off the back of your widened, sterling reputation.
This might take longer if the company you have merged with isn’t very well known, but if you work hard on building good client testimonials and a strong reputation, the quality of your clients should increase within the first couple of years.
Staff synergy
Mergers can be difficult. There absolutely will be opposition. You might think everyone is supportive of your goals, but humans are hardwired not to enjoy change, and so some people might not want to change their process or way of working to join the two companies. You’ll need a robust change management plan to manage this transition.
But you should start to see increasing staff synergy and willingness to comply over time. If you don’t, you seriously need to consider hiring a change management professional.
What is a change management professional
A Change Manager is a professional who manages changing landscapes and environments for companies. They’re particularly helpful if you are merging with another company, because they’ll help your staff and management teams prepare for a merger, which will help with the potential impact the merger might have on your revenue and staff morale.