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were growth, regulatory compliance and
risk management, as well as quality of care.
"Out of mergers and acquisitions,
particularly if they are well done, you
do get growth."
A lack of skilled board members was
another reason cited for mergers.
"They had a relatively ageing
management committee and
recognised that they weren't going to be
able to continue to operate the service."
The CEOs believed that mergers
delivered strategic growth and financial
viability, enabling their organisations to
respond to these public policy reforms.
MERGER SUCCESS FACTORS
There was consensus among the CEOs
that the achievement of better outcomes
for older Australians was pivotal to the
definition of a successful merger.
"At the end of the day, we would only
do those sorts of things because it is
about improving service delivery in
This was followed by the strategic aim
of being able to deliver a continuum of
care to the elderly. The CEOs believed
any financial dividend from mergers
could be reinvested to strategically
position their organisations to deliver
better client outcomes such as ageing at
home, continuum of care and long-term
sustainability of service delivery.
"In the next phase of our strategy
we will be looking at mergers and
acquisitions ... that enables us to
deliver that full continuum of care."
The CEOs believed that management
of people, power and politics, change
management and cultural alignment were
critical success factors to ensure good
"Structural and people changes ... if
you are not prepared to do all of those
things -- this takes great courage -- the
sort of change we are talking about,
you can't expect to achieve."
"But when you have got people that are
fighting the system ... and I am talking
about the executive staff that are actually
not supporting the new systems, then
you are always going to have problems."
Honesty, transparency, clear
communication and cultural
compatibility were also recognised as
critical success factors.
"It's about honouring commitments
... establishing the relationship from
"The things that worked there was good
upfront communication on both sides."
"If they had problems, it's much better
to find out before."
Poor change management, hidden
agendas, power and politics or cultural
incompatibility of the organisations could
result in a merger disaster.
The CEOs agreed they had to allow time
and allocate resources for organisational
transformation, to achieve expected results.
"We don't come in on Monday and
throw the hand grenades everywhere
and blow everybody out of the water.
It is a slow transition ... and it is
fully consultative. There has to be clear
goals and timelines."
They strongly believed that mergers
should be undertaken as part of the
organisations' strategic plan and
supported with clear leadership, to help
people through the changes brought about
by the amalgamations.
"The executive leadership team really
owned this change and at the end of
the day, it is management, from the
CEO down, who is held accountable
for implementing this (change)."
This research identified three critical activities
that can improve the chances of a successful
merger in the NFP aged and community
care sector. Firstly, transparency is vital so
that boards can make an informed decision
about the way forward. Comprehensive due
diligence investigation -- covering financial,
legal, organisational systems and cultural
compatibility -- should be conducted to
understand the true state of merging parties.
Secondly, a clear business case must
be built, outlining the strategic and
financial benefits as well as the risks to
the organisation of the proposed merger.
A merger project plan, based on the due
diligence findings, should be developed to
identify all the integration initiatives that
will deliver the anticipated merger benefits.
These activities could include the
introduction of a new governance and
organisational structure, assimilation
of policies and procedures, corporate
services, quality framework and review of
the service model. Both the business case
and merger plan should articulate how the
merger will deliver better client outcomes
in the new aged care paradigm.
Thirdly, the change must be managed
well and resourced adequately. The
importance of creating a unified culture
based on a shared vision cannot be
understated. Hidden agendas, power
and politics can divert vital energy and
scarce resources away from the successful
post-merger integration and hinder the
realisation of merger benefits. The skills
required to manage this change process
are considerable and the process should
be properly resourced and supported.
If mergers are your preferred business
adaptation strategy, those who manage the
risks well, by adopting these three critical
merger success strategies, will have a much
greater chance of prospering as a preferred
approved provider in the brave new world. n
Indra Arunachalam is strategic projects
manager at integratedliving Australia Ltd.
www.australianageingagenda.com.au | 35
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