Linda, the CEO of a technology oriented firm, told me her company’s pending merger with a logistics company was a ‘match made in heaven.’ The two companies were complementary, not identical, so it wasn’t about cutting cost (or jobs); it was more about synergy and growth.

She said that Dave, the CEO of the smaller logistics company, was a great guy who agreed it was best for him to report to her in the combined company as COO, with Linda as CEO.  After all, Dave had less experience with Boards and raising capital, but had lots of experience making complex operational strategies succeed.

Linda and Dave were planning the first off-site meeting for both of their executive teams, and asked me to facilitate.  I was surprised that in the months of planning the merger that their teams had not gotten together sooner. Dave told me that some team members had interacted in one-on-one meetings, but the teams hadn’t yet had a chance to connect.

When I interviewed the team members to prepare for the off-site, I was struck by their differences. But I was more taken by how they resembled two unique and interesting families. Linda’s team was comprised of passionate, seasoned executives with Ph.D.’s and lots of previous success in large companies. They were fiercely loyal to their purpose and to Linda, who they identified as their ‘genius older sister.’

Dave’s team was smaller and younger – men in their thirties who had worked together since college. When I asked about their culture, they all said the same thing: they were like Navy SEALS, seamlessly collaborating to make their company a success. Each said they could do each other’s jobs, and each spoke about how much they loved each other, like brothers.

When I summarized for Dave and Linda what I learned, I told them the merger was like combining two great families, like the Brady Bunch from old TV. I also said that they might be underestimating how the merger could represent a loss of family identity for both teams. While it was easy to see the financial and strategic value of the deal, the sway of the two different cultures needed to be factored into the equation.

I said that both sides would be fearful of losing that which they invested their hearts and souls: their brother and their sister, and that they needed to be mindful of how they built their ‘new family.’  I worried that Dave and Linda were too enamored by their own relationship and were miscalculating the extent of change for their companies.

They thought my assessment was spot-on, but didn’t change their plans (just shows how much influence I have!).  So we all made flight arrangements for the off-site meeting.

The Sunday before the meeting, I received an urgent call from Linda. A few days earlier, Dave’s team engineered what she called a ‘palace coup.’ They told Dave they wouldn’t do the deal unless he was named CEO of the combined companies, not Linda. Caught between his team’s loyalty and the agreement he had with Linda, Dave didn’t immediately put down their insurrection – he merely reported it to Linda, who became furious.

In the days that followed, Linda’s team learned what happened and moved into a protective crouch – they couldn’t fathom even getting in the same room with the guys who wounded their beloved boss, let alone merging with them.

Attempting damage control, Dave had heart to heart conversations with his team and apologized to Linda. But it was too late, and the deal fell through. When she called to cancel the retreat, one of the last things Linda said was “They lost millions just because they couldn’t let go of what they had.”

As I reflect on what happened, I have become more convinced that managing the emotional side of change needs to be managed as diligently as the strategic and financial sides. Mergers are as much about identity as they are about strategy. In this case, a merger ‘made in heaven’ became hell for all involved.

Linda and Dave were so focused on the future that they didn’t honor the past. They were blind to the need for their teams to separately identify and even mourn what they were giving up. Had they done so, their teams could have developed empathy for the other side, as they were going through the same exact experience. Perhaps this would have created the space they needed to build a shared future together. But alas, this was not to happen.

We’d be curious to learn others’ experience of mergers, whether you’ve led them, facilitated them, or even been on the receiving end. Any lessons you’d share that we all might learn from?

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