Navigating M&A Integration: Balancing Growth, Cost-Cutting, and Respect for People

Dispelling the Myth: M&A Isn’t Always About Cost-Cutting

When people read about M&A in the news, they often assume it’s all about layoffs and cost reduction. While this is true in some cases—particularly in large-scale deals involving major corporations—it’s not the whole story. Many deals, especially those involving smaller or mid-sized companies, are driven by growth. In these scenarios, the focus is on expanding capabilities, entering new markets, or acquiring talent, rather than cutting costs.

Even in larger deals where cost-cutting is necessary, the extent of workforce reduction varies. Sometimes, there’s little to no overlap between the acquiring and target companies, meaning minimal layoffs are required. The key is to approach each deal with a clear understanding of its unique objectives and to communicate these effectively to all stakeholders.

The Importance of Early Communication and Reassurance

One of the most critical aspects of M&A integration is communication. If a deal is growth-oriented and doesn’t involve significant layoffs, it’s essential to convey this message clearly and consistently from day one. Employees need reassurance that their jobs are secure and that the company is focused on growth. However, simply stating this isn’t enough.  Actions must reinforce the message. Leaders must demonstrate through their decisions and behaviour that the company is committed to its people.

On the other hand, if layoffs are inevitable, transparency is crucial. Uncertainty breeds disruption, both in day-to-day operations and in the integration process. High-performing employees are likely to seek new opportunities if they feel their roles are at risk. To mitigate this, leaders should identify and communicate changes as early as possible, ideally within the first few months of the integration.

Cutting Costs with Respect and Speed

When workforce reductions are necessary, I advocate for acting swiftly and decisively. Prolonging the process only increases uncertainty, disrupts business operations, and risks losing key talent. In my experience, it’s far better to make difficult decisions early—within the first two to three months—than to delay and create prolonged anxiety.

That said, speed must be balanced with respect for individuals. Redundancies are never easy, but they can be handled with dignity. For example, if an employee’s role will be phased out over time—such as during a transition to a new finance system—be upfront about the timeline. Offer support, such as bonuses or extended contracts, to help them plan their next steps. This approach not only minimizes disruption but also preserves the company’s reputation and morale.

Minimizing Politics and Maximizing Clarity

One of the most challenging aspects of M&A integration is managing the human element. When roles and responsibilities are unclear, politics and infighting can arise. To avoid this, leaders must provide clarity about who will stay, who will go, and how the integration will unfold. Clear communication reduces speculation and helps align everyone toward common goals.

For example, if two finance teams are merging, outline the long-term plan early. Let employees know if their roles will be retained for a specific period to support the transition. This transparency allows individuals to plan their futures while maintaining productivity during the integration.

The Global Perspective: Respecting Local Norms and Laws

M&A integration becomes even more complex when operating across borders. Different countries have varying labour laws, cultural norms, and expectations around redundancy processes. Leaders must be mindful of these differences and adapt their strategies accordingly. In some regions, for instance, labour laws may require extended notice periods or severance packages. Failing to comply with these regulations can damage the company’s reputation and lead to legal complications.

Moreover, in today’s interconnected world, how a company treats its employees during an integration can significantly impact its external reputation. With the rise of social media and online platforms, disgruntled employees can easily share their experiences, influencing public perception. Treating people with respect and integrity isn’t just the right thing to do—it’s also a strategic imperative.

Lessons from the Frontlines: A Personal Perspective

Having been on both sides of the M&A table—as an advisor and as an employee of a target company—I understand the emotional and professional toll integration can take. It’s easy to write about respecting individuals on a slide, but the real challenge lies in executing these principles in practice. Leaders must pause and reflect on the stories they’ve heard about poorly handled redundancies and strive to do better.

Conclusion: Integration with Integrity

M&A integration is a multifaceted process that requires careful planning, clear communication, and a deep respect for people. Whether the goal is growth, cost-cutting, or both, leaders must prioritize transparency and empathy. By acting swiftly, minimizing uncertainty, and treating employees with dignity, companies can navigate integration challenges while preserving their reputation and morale.

If you’re embarking on an M&A journey, remember that the way you treat your people—whether they stay or go—will define your success. As I often tell my students at London Business School, integration isn’t just about numbers; it’s about people.