photo credit: Alex E. Proimos
 

All startups, at some point have to confront certain questions relating to their existence – about their current situation and the future. “Is our startup heading in the right direction? Will we reach where we wanted to, in the given time? Should we be acquired? Or shall we acquire and progress”? – Some of the dilemmas every startup has.

In several situations, mergers and acquisitions seem just ideal for a startup. But despite favorable conditions, many startups actually decide opting out of a merger or an acquisition decision. And the most common reason behind this is the ‘people issues’ involved in the process.

Mergers and acquisitions involve real people with emotions, egos and aspirations. Deals between companies (legal entities with a separate existence) are just on paper, in reality deals take place between people with emotions and feelings. For example: As a startup founder you are ready to be acquired by another company on a lucrative deal but the position they are offering you in the company is way below what you expect. In that case, you may decide against the acquisition. Your emotion and ego gets involved here.

The top four significant ‘people issues’ in mergers and acquisitions are:
• M&A culture issues
• Human capital Integration issues
• Lack of employee engagement
• Leadership/management retention issues

The discussions did not make much progress as there was no agreement on the pricing and more importantly on the roles and responsibilities of acquired company CEO in the new merged entity.

It is extremely important to understand ‘the people’ in a startup/company and tailoring the deal according to them rather than forcefully placing people in artificial positions and roles.

And yes, ‘people issues’ matter to the success of mergers and acquisitions.

For more information on the issue click here