By Dan Schneider, Rawls Group
A growth opportunity wears many disguises. Sometimes it looks organic; sometimes it looks like a merger or an acquisition; and sometimes it looks like a combination of all three. With each disguise comes a different set of challenges. For now, let’s focus on mergers and acquisitions.
In a merger or an acquisition, one of the biggest challenge the two organizations face is differing core values and cultures. Owners go through an in-depth financial due diligence process during a buy / sell in order to determine the market value of the dealership. However, rarely do they perform any cultural due diligence to determine cultural compatibility. Without cultural compatibility, the integration of a new dealership can be very challenging. The impact of cultural differences is emotional rather than rational. That’s important because the culture of the business influences how the employees behave, which in turn affects decision making.
Every organization has its own set of guiding principles and values. Integrating a new business, team, or entity into your current one creates a “blended family”. When people re-marry and blend their families and homes, turf wars ensue, at least in the beginning, as everyone gets used to the new normal. The same is true of dealerships.
One of the largest issues with the acquisition and integration of the new dealership will be communication. With people and business tightly intertwined, the employees will experience emotional culture shock as they try to determine what the change means for them. There will also be a level of operational culture shock as business platforms and procedures come together. Therefore, communicating early and often in each of these areas can help decrease confusion and remove fear.
Emotional Culture Shock
It is a mistake to assume that personnel concerns will not be an issue in a merger or acquisition. When teams come together there is an immediate fear due to the unknown. There is also the emotional conflict on each side with perceptions of the other as “the enemy”, or “the reason everything is changing”. Bringing your merged teams together and having open discussions helps to minimize the emotional stress that will be present. Establish communication early on in the process to the merged teams to:
- Clearly identify perceived benefits of the acquisition, to both sides;
- Manage expectations regarding career and growth opportunities for all employees;
- Discuss what will change and what will stay the same in the new environment;
- Emphasize the benefits of the additional dealership, which may include improved efficiencies and improved service for customers;
- Talk openly about what you do, how you do it, and why you do it.
Operational Culture Shock
Operationally, there will also be challenges. The new dealership may not operate on the same platforms or use the same processes. To minimize the operational culture shock, ensure that all business processes are made as employee-friendly as possible, meaning simple and easy to follow.
These processes include:
- Sales, CRM and DMS systems;
- Accounting software and practices;
- Human Resource benefits and policies;
- Overall dealership policies and procedures.
Addressing the people and processes is an important step in integrating the new dealership into your culture. It is one tactic that helps ensure that your business goals are not undermined due to a lack of compatibility with teams.
A key strategy in bringing the teams together is development of transition team. This team, consisting of representatives from both the existing dealership and the new one, helps to build trust and confidence. A transition team made up of leaders and high performers from both organizations from Variable, Fixed, and Administrative departments also gives employees the confidence of knowing to whom they can turn for help, thus resolving minor conflicts.
The more you are able to minimize conflict and build trust, the faster you are able to overcome emotional and organizational shock hurdles. This simple approach will help you reach the business goals and objectives that you aimed for when bringing in that new dealership. That in turn drives growth and builds the value of your business.
Dan Schneider, M.A. is a Partner with The Rawls Group, a national business succession planning firm. He can be reached at dschneider@rawlsgroup.com. For more information visit www.seekingsuccession.com
