Remember your first day at college? Although many buildings stood out, if you didn’t participate in the orientation, chances are you were scrambling to find, and remember, where all your classrooms and lecture halls were located. When a organization goes through an M&A, an orientation is just as critical. And boards can’t be overlooked.
I recently co-authored an article about the integration of boards post-M&A, which was published in the September/October edition of the NACD Directorship Magazine. There is very little written anywhere on the topic of “merging boards,” and that’s something that I have quite a bit of experience with, and it’s something I’m passionate about. I conducted my first board integration session back in 2006. The goal of these sessions is to get everyone in one room and quickly get to know each other before the first board meeting with this new configuration took place.
Post M&A, there may be several new faces on the board, replacing outgoing members or augmenting the board. There’s a lot at play here, which can range from disgruntlement to mistrust. So how can we expect to go into a first board meeting acting as if nothing’s changed? It’s unrealistic to believe you can be successful in putting together (possibly) two groups of strangers — both with their own versions of history and experience — and expect they can make effective strategic decisions as if it’s business as usual.
The members of a newly integrated board need to get to know each other, understand how each other think, uncover whether they support the M&A and what all the players are thinking. Something very significant changes as soon as a new board member is added to the team, and even more significant post-M&A, when the oversight of the board is most important.
Boards have a duty to ensure that they optimize their effectiveness at all times. Throughout the M&A process, as well as post-M&A, boards have to be cognizant of the changes that are taking place for their board and with their CEO. They must take the time to acknowledge these changes and understand how they can impact their effectiveness as they go into their very first meeting. Here are a few points to consider:
- Even if the composition of the board stays the same post-M&A, the board should still take the time to meet before the first board meeting to surface the truth about how they feel about the M&A transaction and to make sure they are all aligned with the CEO. It’s not easy. If the board takes the time to align, it will be amazed with the achievements of that first board meeting post-M&A.
- If the board composition does change post-M&A, the board must take the time to meet before the first board meeting. This is even more critical if the CEO has changed. To underscore this, look at sports. Replacing the quarterback half-way through a football game can be an effective strategy against the competition if the players and coaches have talked about, discussed and understand the strategy. Replacing a hurt quarterback half-way through a game can spell disaster if no one has been prompted for the “what if” scenario.
- An M&A is one event where a Board Orientation session should be held, but that’s not the only time when a session like that should take place. Any time the roles within the board change, like the chair, the vice-chair or the chair of committees, it’s important to clarify the roles before engaging in the first board meeting. To illustrate this, let’s look at sports once again. If we take players and move them from offense to defensive positions, our ability to win our first game with this new configuration would be negligible unless all the players were brought together and made to understand how this change would effect our play, and how the game would now need to be executed.
Effective board integration, especially pre-meeting board orientation, can help ensure that the board will be effective going forward. It will help your board move closer to alignment and, if you’re not quite fully aligned, at least you’ll know where you are and why.
I invite you to read a couple of case studies about M&A Board Integration sessions that I have planned and led – the results are powerful for getting the board in-sync and bonding for achieving higher board effectiveness.