By Sam Boyer

Every acquisition is undertaken with great optimism. But combinations that appear to be great on paper turn out to be disappointing for many distributors. The reasons are many: but foremost is the lack of key employee input and participation in the planning and organization of the resulting operation.

It is not unusual for the acquiring distributor to blame disappointing post-acquisition performance to high purchase price, excessive leverage, or the aggressiveness of the competitors. However, the usual reason for these failures can be traced back to employee related issues: delayed decisions, lack of integration planning, poor communications, passive resistance, or the departure of key employees.

An acquisition requires more than taking control of assets. Combining organizations involves more than consolidating brands and equipment. The real challenge lies in merging the organizational structures, management styles, employee expectations, processes, and cultures. This is the employee side of distributor acquisitions. The employees of acquisitions will ultimately drive performance, consume payroll dollars, and be impacted the most from an acquisition. Since they are the most impacted it is critical they receive the greatest attention prior to the closing.

The ongoing activity of acquisitions in the beer distribution industry shows no sign of slowing. If anything it may increase dramatically over the next two years. It is becoming very important for distributors and their managers to learn how to manage the integration of one operation into another. Distributors and managers must spend the time and truly plan for all the people issues that will arise before and after the closing.

If the integration process is not properly managed the combined distributorship will not realize the potential financial and marketing goals set in the initial planning. The needs of warehousing, delivery, and sales staffs are very important. However, the people issues are much tougher to tackle. Unfortunately many distributors do not address them on a timely basis. Many address them only when forced to; some never do.

Key employees must be involved as soon as possible prior to the closing. Their input is critical for the strategy, organization, people, communication, and post merger integration issues. Many distributors wait to develop their integration plans after the deal is closed. This tactic will ensure the consolidation process struggles, key employees are lost, unnecessary expenses are incurred, and the competition gains market share.

Acquisitions are one of the most distressing situations for employees. Their primary concern is will I have a job? Next, what will happen to my compensation? And finally, who will be my supervisor? The post-integration plan must address all these issues. When a distributor closes on a deal without addressing its post-acquisition organization, employee roles, reporting relationship and compensation they are headed for disaster.

At best employees will be lukewarm to the acquisition if they have no input into the new organization and management does not address their issues on a timely basis. Key employees know the status quo cannot be maintained. However working in an unstructured environment for an extended period of time will cause apathy on the part of the employees.

Apathy will turn into passive resistance. Passive resistance happens when employees do not overtly try to disrupt operations, but they also do not try to improve them. Employees will "forget" certain tasks of their jobs, not do a task completely, or not learn the new tasks required in the consolidated organization. When passive resistance takes over an organization rooting it out will become a massive job.

It is imperative distributors have well thought out organization plans for the new operation, with employees assigned to positions, compensation plans that have been individually reviewed with each employee, and job descriptions (that have also been individually reviewed) before the closing ever takes place. Performing all of these tasks will require a lot of time and effort up front. However, the payoff after the closing will be greatly increased.

After the organizational plan has been finalized it must be implemented immediately after the closing. The competition is not going to sit back and allow you extra time to get your act together. A distributor is far better off to implement a "good plan" that may need adjustment than to wait until the "perfect plan" is available. If you wait your employees will lose their enthusiasm for the consolidation. Most importantly, employees will readily embrace your view of a consolidated organization if you have a good plan that is implemented rapidly. Employees will drift into their own level of comfort if the plan is not implemented rapidly; passive resistance will take the place of enthusiasm.

Brands, trucks, and warehouses can be acquired. Employees cannot. When it comes to employees the acquiring distributor has to "sell the concept" of the combined organization. He/she has to make sure that not only are the new employees on-board with the concept, but also the existing employees embrace the new organization. Anything less than a complete "sale" of the consolidated concept will result in opportunities for the competition, additional expenses, and allow passive resistance to overtake the organization. This will slow and perhaps stop the integration process and be costly in both sales and profits.