Executive Summary

Mergers and acquisitions (M&A) are notoriously complicated, and Rowan Wakeford’s first of many M&As was no exception. Wakeford shares how organizational change management (OCM) helped in the complex merger between two law firms and how he brought this valuable experience to his role in Stratascale’s Transformative Services team.

Defining Organizational Change Management

OCM drives a successful merger, acquisition, or divestiture.

DealRoom defines change management as the “process through which a company creates value from change. It takes an analytical approach and considers all of the areas which traditional M&A overlooks in the M&A process from people and values to processes and technologies.”

During his first merger, Rowan Wakeford, now Stratascale’s Senior Managing Consultant in Transformative Services, understood the importance of OCM despite not knowing the term: “OCM wasn’t a term I was familiar with, but I understood friction and the limitations of people’s ability to adjust to change. People are only capable of a certain amount of change in a certain amount of time. The same is true for changes in IT. That ultimately maps to OCM.”

OCM creates value by ensuring that people—the most complex part of people, process, and technology—are at the forefront of the many changes that come with merging and acquiring organizations. 

Merging Law Firms

Although Wakeford has since taken part in several M&As, the first stands out as the most memorable, and he’s carried the lessons from that experience to his work at Stratascale. As Wakeford recalls, “It was the largest merger of two law firms in UK history. And these were two firms that, in part, specialized in certain sectors of law. Aerospace was one of them.”

M&A poses complex challenges across all industries but brings unique challenges to law firms. Because law firms have to avoid conflicts of interest, they cannot represent both a plaintiff and a defendant at the same time.

Wakeford explains, “We started to have a lot of what’s called ‘conflicting out,’ because you can’t represent both sides of the case. So, if you acquire another firm and you already have 30 percent of all aerospace and they’re another 30 percent of all aerospace, the math dictates that you have this 10 percent overlap where you’re going to be on both sides of the table.”

Wakeford explains that the conflicting out process led to “these knock-on effects of, we can’t take on these cases, but those clients might have other cases with us that we could represent. Does the client want you to represent one case for them but not the other? So, it becomes this cascading complexity of trying to answer ‘how do we do it?’” Wakeford continues, “Ultimately, the firm decided to just spin off a large portion of the practice, by focusing on prioritizing the clients and partners with the greatest strategic value. The rest ended up lifting up shop and going somewhere else.”

Understanding User Impact

After identifying the lawyers and accounts to divest, Wakeford and team shifted their focus to the remaining employees. “From day one, we knew that trying to integrate everyone and keep everyone happy was impossible. So, you might as well accept the pain upfront and hire them like they’re new people. We essentially went group by group and told the lawyers and support staff to pack everything up on a Friday, come across, and we loaded all their data into the systems over the weekend so they could come in on Monday and keep working.”

Wakeford and team realized that, in this case, it made the most sense and benefited employees more to have them come over to the new systems and face the big changes all at once. This was better than experiencing a series of slow and tedious changes. “We knew that lifting and shifting those people was less impactful than trying to make the systems work and constantly having changes. Just rip that bandage off, train them, lose productivity for a month, and then get them billing again.”

Nearly all employees have experienced moving to a new job at least once in their lives. Because they understood what that process would entail, their familiarity with the process brought an extra degree of comfort and reduced change fatigue.

The lift-and-shift approach had less impact on productivity in the long run, and it was a better experience for end users. That isn’t to say this approach works for every deal, however. What may have resonated with lawyers at a law firm likely won’t resonate elsewhere. Employees in IT or sales, for example, would have far more changes to adapt to when it comes to performing their work.

Wakeford emphasizes a crucial lesson: Let your user impact drive your strategy.

“The user impact drove the strategy. Whereas often the strategy is decided first, and the user impact is analyzed second.” —Rowan Wakeford

Communication is Key

Communication is often regarded as the most difficult part of a merger, and this case was no different. Wakeford recalls, “We struggled with communicating the effects of the changes. Even if you do things perfectly, people don’t always understand what that means to them.”

“They relied heavily on Lotus Notes. We’d just gotten rid of Lotus Notes, so we inherited a bunch of Lotus Notes, and we were pretty set on, ‘it’s going away.’ And everyone said, ‘okay, that’s fine.’”

Wakeford continues, “But what didn’t get communicated is not everything you can do today is going to be possible in the future. We had a secretary who had everyone’s birthdays in there, which was important to that secretary. But others might ask, ‘what’s the business value?’ But that secretary became a vocal blocker in the process. That became a huge problem—who’s right? Who has to change? How do we fore change but still make them happy? And that was difficult for us.”

Wakeford explains that a better approach would have been to communicate earlier on, and to frame the discussion around what you’ll be improving rather than what you’re taking away.

“Instead of saying ‘we’re trying to take your cookies away,’ frame it as, ‘we’re trying to give you better cookies.’” —Rowan Wakeford

Jason Hood, Stratascale’s Chief Technology Officer, adds, “Communication is vitally important. The communication of those changes goes back to employee experience, and making sure that people have multiple warnings and multiple ways of hearing the message. It can’t just always be an e-mail.”

Wakeford learned that early communication in multiple forms and positive framing is essential for smoother M&A integration. Equally important is ensuring that your message is understood the way it was intended.

Business Impact Analysis

As Wakeford explained in recollecting the secretary using Lotus Notes, determining the business value of applications and the information they hold is important to help facilitate decision-making using facts. Wakeford explains, “We got there in the end, but we had to do business impact analysis, which can slow you down.”

Often IT is pressured to implement change as fast as possible, but putting in the work to analyze business impacts upfront can lead to more value later on.

Hood adds, “You have to think about the major business process changes that have to happen as a part of an M&A. It's not always just technical. For example, agreements have to be put in place that allow all of the business processes to still function over the course of time, like with domains. You wouldn’t want your invoices being emailed to the old domain owned by the previous company.”

Cross-Pollination and Wisdoms

Wakeford also shares an unexpected result of the merger: “We bogged down in the end and ended up adopting some systems that just hung around. They had lots of case management, and we weren’t a case management-based law firm. The combined firm added new capabilities that actually cross-pollinated. We started seeing the acquiring groups start moving into the case management world. That was unexpected, because we hadn’t done any analysis on that kind of change to begin with, or even really mapped things out by capability that way.”

A team can do everything “right” by conducting impact analyses and communicating early, yet M&As will likely never go exactly as planned, and unanticipated outcomes will occur. Some outcomes can be positive, but that’s not always the case.

Flexibility and openness to change are essential to a successful merger, acquisition, or divestiture. The traditional path for M&A—as well as for many IT and business projects—is very rigid and waterfall. There is a tendency to adhere to a plan just because that’s the way it was planned, even if circumstances or information change, as they often do. Instilling an agile approach with visibility, governance, and feedback loops enables decision-makers to adjust and course-correct over time, ultimately steering toward better outcomes.

The most effective M&A teams exhibit an openness to adopting elements of the companies they acquire, rather than narrowly focusing on slotting companies into existing tools and processes. For example, if you buy a furnished house at an auction, you don’t want to be the person who tosses all the artwork without stopping to check if it’s valuable. Understand that the company you’re acquiring may have assets in the way of technology, process, and business capability that could be valuable to adopt for your company and/or the merged entity. Even if these elements are not the driving factors behind the acquisition, there may be real value there, and you may be leaving money on the table if you don't look for it.

Takeaways

Although Wakeford did not use the term OCM when he partook in the law firm merger, he quickly learned of its importance and has since carried those lessons into his work in Transformative Services at Stratascale.

Wakeford explains, “When we set up a TPO [Transition Program Office] and implement OCM early on, it’s not just a ‘do the exercise.’ It’s ‘set up the capability, the function, to continually do that throughout the transformation.’” OCM is not simply a consideration in the M&A process—it’s foundational to every step.  

Speak with a Stratascale expert in OCM and M&A.