A tale of two mergers

A tale of two mergers

A nice – and unusual – way to round up the year: two large-scale, highly-prominent ‘mergers of equals’ are both showing signs of…solid integration success! This week, Dixons Carphone, the product of the £10bn merger between Carphone Warehouse and Dixons Retail Group, announced that their integration was a year ahead of schedule in delivery of synergies (click here for a recent summary from the Financial Times). Meanwhile, the $11bn merger between American Airlines and US Airways also presented strong progress amidst a field littered with failed airline mergers (click here for a review from Airways News).

What’s up? These are the very deals that are supposed to fail spectacularly to provide years of material for case studies, speaker presentations and ‘how not to do it’ guides. Instead, let’s join in some Christmas spirit and use a few nuggets from each to look at what both scenarios tell us about successful mergers of equals:

  • Get everyone onto the same the big picture: Dixons Carphone’s chief executive, Sebastian James, insisted up-front on a achieving a “single vision of what we wanted to achieve and a vision of where the world was going”. On the Sunday before completion, the Oxford Street branch organised a meeting, over pizza, “so that every single team member understood why it was happening and why it was so important.”
  • Learn from others: Beverly Goulet, AAG’s Chief Integration Officer, noted that American had taken some lessons from prior mergers. “We looked at other mergers and learned from them. It has guided what we do.”
  • Think about the detail: The Dixons Carphone integration team decided to mark out Carphone areas with lighter coloured flooring, to distinguish them from the space occupied by the legacy Dixons brands, Currys and PC World. Mr James now worries the flooring may send the wrong message to staff and customers about a partnership he hopes will be seamless.
  • IT is important, the people more so: Commenting on American’s merger success to date despite significant challenges in integrating their reservation systems, Beverly Goulet states, “Systems can work well but if our employees don’t have the right level of training, then they stumble. It’s more than technology. It’s what we ask them to take on and at what pace.”
  • Keep the roles clear: “We have thought about [division of responsibilities] very hard,” says Mr James. “We were very, very determined that this should not become a Game of Thrones and that we reject intrigue.”
  • Lead from the Front: A lot of the success at American is about CEO Doug Parker’s leadership – he is a big proponent of communication with frontline employees and HQ. Things are going well in that regard according to Beverly. “We have very honest conversations [with their employees] about where we can do better then we have.”

I and the team at BTD wish you all a very happy holiday season, and a successful start to 2015.