Mergers & Acquisitions

 View Only
Expand all | Collapse all

Life Sciences Mega Merger

  • 1.  Life Sciences Mega Merger

    Posted 8 days ago
    Edited by Matt Cinelli 8 days ago

    Hi everyone! I work in the transformation office of a top 20 enterprise life sciences firm and we are in the early stages of merging with a similar sized competitor. The deal has already been negotiated and signed, and now we are in the planning phase. Both firms have strong operational cultures, high employee engagement, and stellar net promoter scores. There is little overlap with products and therapeutic areas. They each have established a solid market presence with a recognizable brand among health care providers and patients.

    I've worked on several acquisitions and a few post-merger integrations where cultural factors made the transition more challenging than expected. What have you learned that will help us stay on track to a smooth transition? Specifically, how would you approach the inevitable process of creating synergy while limiting friction and/or conflict that might undermine our goals as the two firms become one?

    We're looking at several components to build a transformation framework:

    1. Unified Operating Model

    2. Transformation Office

    3. Org Design Factors

    4. Performance Metrics and Rewards

    5. Culture Audits and Communities of Practice

    Initial conversations have been cordial and readiness assessments express very positive sentiment toward the merger. Please share your overall thoughts about establishing a strategic transformation office, or your perspectives on how you've dealt with the considerations mentioned above.



    ------------------------------
    Matt Cinelli
    Principal Consultant
    Le Savoir Faire Consulting
    matthewca@email.com
    ------------------------------



  • 2.  RE: Life Sciences Mega Merger

    Posted 7 days ago

    Thanks @Matt Cinelli for sharing this. This sounds like a great opportunity to bring two strong cultures together. Its also great to hear that initial conversations and sentiment seem to be very positive towards the merger. A few initial thoughts:
    - Culture Assessment will be key and a prime opportunity to reinforce where the cultures are alike and will strengthen and identify those friction points between the cultures that could require culture change for one or both cultures. For example, how is performance measured, how are decisions made, how entrepreneurial or hierarchical are the companies? These are ways of working that could be points of tension, especially if one culture is emphasized over the other. 

    • Integration Management Office: This will be key in having influential, respected leaders work through some of those challenges and opportunities in integration and being able to communicate broadly across the enterprises why things are being done and the roadmap for what is being worked throughout the integration. It'll be important to highlight the known knowns and the plan for addressing them while also how they will partner with people across the integrating companies to unearth those unknowns and address them.

    Best of luck!



    ------------------------------
    Evan Piekara
    ------------------------------



  • 3.  RE: Life Sciences Mega Merger

    Posted 6 days ago

    I have worked on a few Mega Pharmaceutical mergers/acquisitions.  The most important task for the Transformation Office is constant communications.  Everyone on both sides of the deal is paranoid about losing their jobs or career paths.  It impacts managerial positions most.  If any time lapses between communications, the rumors start.  Add that to the fact that a certain amount of the staff will leave either by retirement or to move to another company.  It is chaotic by nature.  Technology and other things that are heavily involved are big distractions from the impact to the welfare and psyche of the employees.  The uncertainty goes well past the actual completion of the merger as re-organizations, not initially on the radar, will take place.

    On the other hand, there will be significant numbers of people who will be excited by the changes.  If the end goal is to keep each entity functioning as before without major re-branding, it can be a relative painless endeavor.  However, the new entity will be top heavy and ripe for trimming.

    Not sure how helpful this is but it is my reflections on what I saw not only in the Pharma sector but in others as well.  The issues are not industry specific.



    ------------------------------
    Frank Gorman, Former ACMP Board Member, Transformation Consultant
    ------------------------------



  • 4.  RE: Life Sciences Mega Merger

    Posted 6 days ago
    Edited by Matt Cinelli 6 days ago

    Hi Frank, yes, the critical role of timely and transparent communications cannot be overstated. Whether through direct manager conversations, all hands/departmental meetings, or organization wide messaging platforms (email, intranet, Teams, Slack, etc.), nothing does more to set the tone than early reassurance that "we're in this together", and "we will work with you and support you" to allay fears, concerns, and as @Evan Piekara mentioned the known knowns. Too often I've seen information withheld that can be shared in advance which could dampen the rumor mill.

    I also like to do scenario planning with personas so we can identify ways to develop messages for the groups you mentioned. Work with the promoters, assure the fearful, have frank conversations with those struggling with the uncertainty.  Of course, its difficult to anticipate every outcome, but when bigger risks are anticipated and mitigated, the chaos can be reduced to tolerable and even energizing!



    ------------------------------
    Matt Cinelli
    Principal Consultant
    Le Savoir Faire Consulting
    matthewca@email.com
    ------------------------------



  • 5.  RE: Life Sciences Mega Merger

    Posted 6 days ago

    Hi Evan, I would caution everyone that the appearance of compatible cultures may be an illusion. Two strong cultures may have the seeds for a smooth integration but could present risk if they are "parallel", strong in themselves, but not necessarily disposed to working together. As in any merger, some individuals will be positively motivated, while hidden pockets of resistance could influence the tone and sentiment of the group.

    I like the idea of "integration office" but feel we should agree on terminology, is the "transformation office" which contains project managers, as well as change managers the same as the integration office? More importantly, what is the executive sponsors' appetite for another layer of governance? Will it be performative alone, or does it have the visible endorsement and support of the executive leadership team? How much bandwidth does the organization have for additional layers of management direction and oversight. Or will this be change management in name only? 

    Once there is alignment among leadership, I propose beginning with discovery workshops and listening sessions that give every level the opportunity to voice their concerns and identify potential risks.  This allows necessary data to rise to the surface in a safe environment, informing how we move forward in a high stakes initiative.  This information will influence how decisions are made about roadmap and tactics in the change management plan.



    ------------------------------
    Matt Cinelli
    Principal Consultant
    Le Savoir Faire Consulting
    matthewca@email.com
    ------------------------------



  • 6.  RE: Life Sciences Mega Merger

    Posted 7 days ago

    You're certainly thinking this through from all angles!  I recently reviewed the contents of a PowerPoint deck posted on the M&A community's home page created by Tanya D. Cane.  It's titled "MandA-Cultural-Integration-Building-Stronger-Organization…pptx.  The link is https://connect.acmpglobal.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=383f34f7-48ad-4346-b2be-019889bc0e12&forceDialog=0.  It contains a lot of content that you may find useful.



    ------------------------------
    Jennifer Lipschultz
    ------------------------------



  • 7.  RE: Life Sciences Mega Merger

    Posted 6 days ago

    Thanks for sharing @Jennifer Lipschultz and thanks for putting this together @Tanya D. Cane. Great insights!

    I appreciated @Frank Gorman's point on communications. There will be a lot of uncertainty, rumors, and stress caused by these mergers and the Transformation Team plays an essential role in providing clarity around the why, how, when, and who. They need to activate leaders in messaging and taking the appropriate actions to help drive that confidence and clarity. 



    ------------------------------
    Evan Piekara
    ------------------------------



  • 8.  RE: Life Sciences Mega Merger

    Posted 6 days ago

    Thank you, @Jennifer Lipshultz! Having this resource allows us to select from the menu of the critical factors to address during large scale transformation. Based on my experience, some mergers allow the separate entities to operate relatively independently, while others prefer a more closely aligned new organization. What I like most about the Tanya Akins Cane resource is having a set of variable as a baseline, and using them as a starting point for where cultures will merge with minimal effort, where it's worth it to devote time, and where a parallel approach is the best strategy for both entities and their people. This will be an important reference document for the current project and future engagements!



    ------------------------------
    Matt Cinelli
    Principal Consultant
    Le Savoir Faire Consulting
    matthewca@email.com
    ------------------------------



  • 9.  RE: Life Sciences Mega Merger

    Posted 6 days ago

    Hi, Matt:

    Everyone has provided very thoughtful suggestions and feedback on your question, so you're clearly engaged with experienced professionals!

    My first question is if you've completed a culture assessment?--recommended to do during due diligence, but since the deal is signed now is the perfect time! Sounds like you have some good data already about the cultures of each organization, but the more data the better to help identify synchronicities for alignment and significant differences that must be addressed to smooth the transition and integrations. 

    Sometimes the acquiring company's leadership has to agree to adjustments, e.g., emphasizing strengths in the acquired company rather than their own to "make it work." Because, as we all know, this is stressful time for acquired employees and contractors and if you try to change their culture while integrating them you're in for a lot of stress and struggle, and possible failure.

    I agree with you on developing personas; they help identify values important to each culture, which of course can help with message development, resistance management strategies, creating a sense of belonging and inclusion, among other benefits.

    Also, re the Integration Management Office (IMO) it is focused on the overall integration, including all functions and workstreams, so includes representatives of all functions responsible for the successful integration--e.g., IT, change management, cybersecurity, HR, etc., not change management-centric.

    in my experience, the change lead for each function report into the IMO as well as the organization's change management office (CMO), if one exists, so establishing a separate transformation office seems unnecessary.

    I'm definitely interested in your progress so please keep us updated!



    ------------------------------
    Diane Weinsheimer
    ------------------------------



  • 10.  RE: Life Sciences Mega Merger

    Posted 5 days ago

    Hi Diane, Thank you for your follow up to this post! I was brought on after the decision was finalized, but I know some culture discussions were part of the decision making process at the board level, even if only incidental. A high level summary of those discussions will be an input to our discovery and listening sessions. I like to collect culture data from leaders then validate strengths and gaps with front line managers and their reports. The outputs can be used to iterate planning through two-way feedback, and craft messaging for communications and engagement assets.

     Different clients refer to the office managing the transition with different terms. I agree there should be a common understanding and consistent terminology. For far reaching initiatives like a merger, they are managed by a transformation office or an integration office, one or the other, but not both. Individual workstreams report through the affected function whether HR, IT, etc. We have found, inviting one key report from each function or workstream supports accountability from the executive overseeing that function. 

    Ultimately, when I am an internal FTE, I have a greater degree of influence compared with roles where I am a contractor. If serving as a primary independent vendor, I will write specific terms into the contract so the clients' sponsors have clear expectations about what will be required.



    ------------------------------
    Matt Cinelli
    Principal Consultant
    Le Savoir Faire Consulting
    matthewca@email.com
    ------------------------------



  • 11.  RE: Life Sciences Mega Merger

    Posted 6 days ago

    Hi Matt,

    In my experience with similar life sciences integrations, the biggest trap when merging two strong, successful cultures is assuming that "complementary products" automatically implies "compatible ways of working." For your Strategic Transformation Office, I strongly suggest establishing a federated structure that pairs leaders from both legacy firms to co-lead key workstreams, ensuring neither side feels conquered or overruled. To limit friction, move beyond standard culture audits and focus on identifying specific "cultural non-negotiables" from each organization to build a unified operating model that explicitly honors both histories. Since you have high engagement now, prioritize transparency in your performance metrics and rewards strategy immediately, as uncertainty here is the fastest way to erode that stellar Net Promoter Score. Ultimately, your success will rely on creating cross-entity communities of practice early, forcing teams to solve real business problems together rather than debating theoretical differences.



    ------------------------------
    Tanya D. Cane
    ------------------------------



  • 12.  RE: Life Sciences Mega Merger

    Posted 5 days ago
    Edited by Matt Cinelli 5 days ago

    Hi Tanya, thank you for your contribution to this discussion. Yes (ha, ha!) I wrote this prompt intentionally optimistic, from my project experience, understanding that friction, even when negligible, can impact employee sentiment and experience. Of course, rarely will two organizations ways of working and cultural practices so aligned that they join seamlessly. The distance between them can mean a smooth transformation, or persistent trouble spots. Culture audits can shape the agenda, but unless there's a structure for intentional discussions about what we do differently, and how we can work together, those minor trouble spots become land mines.

    I love your suggestion of "cultural non-negotiables" as a basis for discovery and planning discussions. I've found that leaders are usually assigned to their respective workstreams, and as you've pointed out, they should be engaged in consistent cross-functional dialog. I've used "federated" in reference to data platforms, but of course, why not also with the crucial work of aligning people during mergers!

    Ultimately, success depends on the willingness of leaders to take the transformation office seriously enough to participate. Depending on the authority and ownership I am empowered to exercise, these factors can make or break my efforts to continuously guide the human process of working out what the new organization will look like and how it will perform. Once there is sufficient agreement, I like to discuss performance and metrics rewards to reinforce the new ways of working.

    Lastly, I just love your cross-entity communities of practice as a follow up to a federated transformation office. Ensuring ongoing open communication is the heartbeat of the organization design and implementation, giving everyone an incentive to remain actively engaged during the planning phase and throughout integration process.



    ------------------------------
    Matt Cinelli
    Principal Consultant
    Le Savoir Faire Consulting
    matthewca@email.com
    ------------------------------