Why a Winning Leadership Team Matters for M&A Strategy

What makes a merger or acquisition a success? It all starts with having the right leaders in place. Research shows that strong leaders predict M&A strategy success and specific competencies are associated with high-performing deals.

The right leadership team is so critical because they have a big job on their hands: ensuring executive alignment, setting the cultural vision for the new company (Newco), and making timely and effective decisions. They define the strategy for Newco, inspire people to be part of something bigger, and maintain a laser-like focus on integration priorities. Through their communications, actions and behaviors, leaders set the standard for how work will get done in the new organization.

Choosing the right leadership team, of course, is easier said than done, especially when you find yourself with two of everything for many key leadership roles. What’s more, in some cases, neither person may be the right choice for Newco. If not planned for intentionally, there’s a risk that selection decisions will be made via bartering or negotiation versus objective rigor.

Here’s how to sidestep common mistakes and assemble a winning leadership team for day one readiness and beyond.

M&A Integration: Skills That Matters Most for Leadership Success

Finding the right leaders is critical when two organizations come together. These leaders are being asked to simultaneously run an existing company and create a brand-new company while moving through a complex business climate characterized by crisis and disruption. They must be the ‘meaning makers,’ rallying employees from Company A and Company B around a compelling vision for Newco amid internal uncertainty and upheaval. It’s a tall order, and two skills rise above the others: adaptability and learning agility.

Leaders with a strong adaptability competency meet new challenges as they arise, thrive on change, and make sense of uncertainty. Unexpected events do not emotionally trigger them. Instead, they shift into solution mode, performing well regardless of circumstances. Similarly, leaders with strong learning agility have an innate sense of “knowing what to do” amidst uncertainty, coupled with an open and receptive mindset. One component of learning agility is mental agility: the ability to embrace uncertainty and uncover novel ways of doing things—an essential skill for M&A success.

Learning agility also impacts the bottom line. Our research shows that companies with the greatest rates of highly agile executives produced 25% higher profit margins than their peers–which helps your M&A to be successful.

“Individuals with high adaptability and learning agility have the ‘X-factor’ that propels success,” says Sherry Duda, Senior Client Partner and Korn Ferry’s M&A practice lead. “They have learned how to run the business and change the business at the same time. They can perform and transform.”

Choosing Newco’s Leadership: 3 Questions to Ask

Mergers impose short, urgent timelines on leadership. With thousands of decisions to be made, it’s critical to fill governance positions as quickly as possible with the right leaders. But how can you confidently identify the agile leaders of the future when you’re unfamiliar with the new internal talent pool from the acquired company?

Start by asking these three questions:

1. What talent do we need?
2. What talent do we have?
3. How do we close the gaps?

“Companies need to make decisions quickly and confidently, but in the early stages of a merger or acquisition, there’s no rhythm yet and no rules of the road,” says Duda. A common mistake is to focus on task integration first versus human integration, she says. “Task integration can seem easier since objective data exists on system effectiveness. The truth is, objective data exists on people too. But avoiding the hard issues around people is a mistake. Get your team in place from the beginning and start making key leadership decisions early based on objective criteria.”

Making Leadership Decisions: 3 Steps for Success

In a highly charged political environment, there’s a tendency to default to two common processes for leadership selection. One option is for Company A to retain most of its current leaders and let most of the Company B counterparts go. Another option is to strive for a 50/50 integration: half the C-suite is made of Company A and half is made of Company B. Neither approach leads to long-term success.

“Leadership selection must be made using objective, data-driven decisions,” says Duda. “This is the only way to determine if you’re truly selecting leaders with the skills needed for success, like adaptability and learning agility. This isn’t about making a gut choice or one company asserting dominance over another. If the goal is for Newco to be successful from Day One, then you need data-driven insights.”

A consistent, objective, and transparent process is essential for selecting the right leaders. If you’ve asked the three key questions, you’ll have a good sense of where your overall bench sits. Now, it’s time to assess each individual’s fit for Newco’s leadership and critical roles.