Exploring post-merger integration challenges experienced by leaders in South African organisations

Abstract

Mergers and acquisitions (M&A) as a lever for businesses to achieve organisational and operational growth have been prevalent for many years. However, many M&A transactions do not realise the benefits or synergies that were originally envisaged. Integrating two or more companies is challenging, and even more so for company leaders who are not only responsible for the integration, but also have to realise the synergies by leading the merger’s change process. The consequences of not achieving the envisaged benefits of the merger or acquisition, or it ending in a failed transaction, are immense for the leaders, shareholders, employees, and other stakeholders. Using an interpretivist paradigm, this exploratory and descriptive study identified and examined the major challenges company leaders experience during the post-merger integration phase of such a transaction. Qualitative data were collected from nine purposively selected company leaders who had been involved in post-merger processes in South African organisations. The data transcripts of the semi-structured interviews were analysed using content and thematic analysis, resulting in eight themes, based on which conclusions were drawn. The eight emergent themes representing the major challenges that leaders face in a post-merger integration process are: cultural incompatibility, lack of competent leadership, system and software integration, communication, employee retention, lack of trust, unexpected negative realities, and resistance to change. The findings of this study are aligned with recent literature. Some of the recent literature focused on certain aspects of the post-merger integration process, such as the human element, whereas others focused only on the system element. This study focused on challenges that leaders face in merger integration, thereby combining human and non-human challenges. The study provides managerial implications and recommendations for leaders to consider when engaging in M&A processes. First, leaders must understand and comprehend the dynamics within the post-merger integration process to mitigate the risk of transaction failure.

A limitation of the research is that it concentrated only on leaders who had been involved in M&A transactions in South Africa and the study’s findings may not be a fair reflection of the broader challenges experienced. Another limitation is that only organisation leaders were interviewed, which may have created bias in the findings. Future research could employ a larger sample and seek additional connections between organisational change management techniques, organisational integration strategies used in M&As, and effective change management. Although much research has been conducted on post-merger integration, future researchers could focus on the aspect of culture and cultural incompatibility, which was found to be a key challenge experienced by leaders in the present study.