"Governing a big country is like cooking a small fish." Enterprise management is like cooking. If the heat is not right, no matter how good the ingredients are, it will be difficult to make a delicious dish. In recent years, there have been frequent cases of acquisition of listed companies' control. From Wall Street capital tycoons acquiring traditional manufacturing companies to Internet giants swallowing up start-ups, the management challenges after the transfer of control have become a key factor affecting the success or failure of acquisitions.
When the new boss comes, how to place the old team? How to reconcile conflicts in management concepts? How to continue and innovate corporate culture? These problems have troubled countless entrepreneurs and investors. Goheal has long been concerned about global capital operations and found that "conflicts of interest between new and old teams" have become one of the most difficult problems after the acquisition of control.
Acquisition is not the end, but the starting point of another battle
Whether it is an active acquisition or a passive merger and acquisition, after the change of control, the company will experience a "shock period". The new owner usually comes in with capital, strategy and ambition, while the old management has deep industry experience, network resources and corporate culture identity. Whether the two can be smoothly integrated directly determines the success rate of the merger and acquisition.
Let's look at a few typical cases: In 2015, Didi merged with Uber China. On the surface, it was a capital integration, but in fact it was a clash of management cultures; in 2018, Geely acquired Daimler shares. How to play a role in the traditional system of German luxury car companies became a major challenge for Geely; in 2023, Musk took over Twitter (X) and directly fired a large number of executives, causing market shock. These cases all show that the management challenges after the acquisition are more complicated than the M&A transaction itself. Goheal found in past transaction cases that many companies did not properly handle the replacement of management after the acquisition, resulting in stock price fluctuations, talent loss, business obstruction, and even transaction failure.
Three major contradictions between the new owner and the old team
First, the conflict of power change
The first problem faced by the new owner when he takes over is "who will take the helm"? Will the original CEO continue to manage, or replace him with his own confidant? Replacing the management may bring pain, and retaining the original team may not be able to implement the new strategy. A typical case is that when Buffett's 3G Capital acquired Kraft Foods in 2015, it made major adjustments to the management team, which resulted in organizational chaos and a low point in corporate operations.
Second, conflicts in management concepts
The old and new management teams often have different management styles. For example, traditional manufacturing emphasizes steady progress, while Internet companies advocate rapid trial and error; local companies tend to be family-style management, while international capital advocates the professional manager system. This difference in concept often causes companies to fall into internal friction after mergers and acquisitions. Goheal once observed that many Chinese companies had to readjust their strategies after acquiring overseas companies due to large differences in management concepts.
Third, conflicts in interest distribution
After the merger and acquisition, how to keep the old team "working hard" is a practical problem. Many executive teams of acquired companies will choose to leave due to equity realization after the transaction is completed, while the middle-level managers who stay may lose motivation due to concerns about the future. How to maintain the stability of the core team through equity incentives, salary adjustments, job arrangements, etc. is a difficult problem that the new owner must solve.
How to balance the interests of the old and new teams and achieve a smooth transition?
To resolve these contradictions, listed companies need to develop a systematic management strategy after acquiring control to ensure a smooth transition of the team and avoid the embarrassing situation of "buying a shell company".
First, properly arrange the handover of management to avoid "one-size-fits-all"
Forced replacement of management may cause internal turmoil, while completely leaving management untouched may fail to implement new strategies. Therefore, the optimal solution is "gradual adjustment". For example, when Tencent acquires game companies overseas, it often adopts the strategy of "less intervention and more empowerment", retaining the core management team first, and gradually introducing new management concepts to give the team time to adapt.
Second, set up a reasonable incentive mechanism to prevent the loss of core talents
The management and employees of the acquired party are often worried that their own interests will be damaged after the new owner takes over. Therefore, in M&A transactions, key talents can remain motivated after the acquisition through phased equity incentives, performance target rewards, long-term shareholding plans, etc. For example, when ByteDance acquired Musical.ly (later merged into TikTok), it adopted a core team lock-up period and performance appraisal mechanism, which successfully allowed the team to transition smoothly. Goheal suggested that listed companies can adopt the "golden handcuffs" strategy after the acquisition, that is, through equity incentives and long-term contracts, the interests of core executives are linked to the company's performance to prevent them from "cashing out" immediately after the acquisition.
Third, respect corporate culture and avoid "acclimatization"
The compatibility of corporate culture often determines whether the team can be smoothly integrated after the acquisition. The most successful M&A cases are often those that can respect the culture of the acquired company and find a point of fit. For example, after Haier acquired GE's home appliance business, it retained GE's original brand culture and introduced Haier's Internet management concept, ultimately achieving a win-win situation. Therefore, the acquirer should deeply understand the culture of the acquired company and formulate a reasonable integration plan, rather than simply and crudely implement a new management method.
The success of post-acquisition management determines the ultimate value of the acquisition
In the capital market, the success of an M&A transaction is not just the signing of an acquisition agreement, but is reflected in the business growth and market value increase after the acquisition. If the new owner cannot balance the interests of the old and new teams, resulting in management chaos, employee turnover, and strategic obstruction, then even a sky-high acquisition may become an "expensive failure."
So, what do investors and entrepreneurs think about the management challenges after the acquisition of control? What methods are most effective in the process of integrating new and old teams? Have you ever experienced or observed similar M&A integration problems? Welcome to leave a message in the comment area for discussion. Goheal looks forward to discussing the best solution with you!
[About Goheal] Goheal is a leading investment holding company focusing on global M&A holdings. It is deeply engaged in the three core business areas of listed company control acquisition, listed company M&A and restructuring, and listed company capital operation. With its deep professional strength and rich experience, it provides enterprises with full life cycle services from M&A to restructuring to capital operation, aiming to maximize corporate value and achieve long-term benefit growth.
