If you are tasked with delivering a merger,
you have a huge amount of leading,
persuading, cajoling and encouraging to
do in order to realise your objective.
Your audiences are both internal
and external. Within your firm, you are
responsible for understanding the mood
of the wider partnership group and
persuading others of the merits of the
proposed action (along with the nonviability
of the status quo). You then need
to lead partners, lawyers and business
support personnel on a journey which a
number will approach with trepidation and
resistance.
Externally, you will need to influence
the leadership team of the prospective
merger firm, interact with clients and
explain the benefits of the merger from
their perspective. You also need to engage
with the media to ensure that any deal is
positioned correctly in the public domain.
Success across such broad tableaux
requires not simply logic, structure and
a clear plan, but also a high level of
social and emotional intelligence to read
situations and react appropriately. This
is vital in all stages of a merger in order
to motivate, maintain momentum and
build confidence. So, what is emotional
intelligence and can it be learned?
Emotional intelligence
The term emotional intelligence was first
proposed in 1990 by Salovey and Mayer,
who described it as “a form of social
intelligence that involves the ability to
monitor one’s own and others’ feeling and
emotions, to discriminate among them,
and to use this information to guide one’s
thinking and action”. 1
Their work was picked up on by
Daniel Goleman who, in 1995, wrote the
bestseller Emotional Intelligence which
he then followed, three years later, with
Working with Emotional Intelligence.
It had been noted that, while important,
pure cognitive ability (i.e. that which
is measured by the traditional IQ test)
appeared to play only a limited role in
why some people were more personally
successful than others. Numerous
research studies pointed to the importance
of emotional and social factors.
Goleman’s work sets out five
‘domains’ of emotional intelligence:
- knowing your own emotions
(i.e. self-awareness);
-
managing your own emotions i.e. self-regulation);
-
self-motivation;
-
recognising and understanding other
people’s emotions (i.e. empathy); and
-
managing the emotions of others (i.e.
social or relational skills).
Good leaders score highly in each of these
domains. All leaders can actively work
to improve their emotional intelligence,
whether in a focused way to address
specific areas or broadly across all of
the domains.
It would be incorrect to assume
that those with high levels of emotional
intelligence are born, not made. While
it is true that each of us possesses an
innate level of emotional intelligence, it is
possible to improve our abilities across all
of the dimensions. This can then lead to
improvements in personal effectiveness
and performance.
For example, someone wishing to
focus on enhancing his empathy could
actively consider other people’s positions
in a methodical and structured way and
carefully evaluate other perspectives rather
than assume a collective position which is
the same as his own.
Similarly, an awareness of body
language – both one’s own and that of
others – can allow a better understanding
of underlying feelings to be developed.
Reading these non-verbal clues can
be immensely powerful and ensure the
response or approach that is given is
most appropriate.
This ability to stand in the shoes of
others and to view the world from their
perspective is a key attribute that can be
employed both for people management
within your firm and externally in
negotiation, objection handling and practice
development. Within a merger situation,
empathy is crucial in allowing one to dig
deeper than the pure logic of a particular
point and to understand the personal,
social and cultural context of the firm.
Through personal development
across these areas, productivity can also
be improved. This happens through a
reduction in conflict and a consequential
increase in stability, better understanding
of business and personal relationships,
improvements in teamwork, reduced stress
and better business continuity. In short, the
likelihood of success is improved.
Enhanced emotional intelligence can
deliver a range of benefits both for you
personally and your firm. Within the context
of a merger, being able to operate with
high levels of emotional intelligence can
result in better outcomes and improved
probability of the new firm.
Merger process
Any merger has a number of wellestablished
stages, within each of which
emotional intelligence has a role to play
alongside more traditional and logic-driven
management processes.
Pre-merger review
The first stage of any merger is to assess
one’s own position and consider whether
a merger or acquisition strategy should be
pursued. A merger is a means by which
a strategic objective may be realised.
Any approach based on a merger offers
opportunities and challenges, both of
which are potentially significant.
The decision to even embark on a
merger process is one that is loaded with
emotion. Fears may abound within the
partner group ranging from the impact on
them personally to the wider implications
for the culture and social fabric of the firm.
‘Things won’t ever be the same again if
we merge’ is the underlying sentiment for
many, regardless of whether or not this is
verbalised. Of course, such feelings are
generally expressed pejoratively, but that
need not be the case at all. Different need
not (and should not) mean worse.
The emotionally-aware leader will
paint a vision and develop a strategic
narrative which describes a future that is
better than the status quo and the likely
scenarios which will arise from adopting
a purely organic approach. It is clear that
emotional intelligence has a role to play,
even in getting a merger to be seen as
a viable option.
In one case, a managing partner
spent six months in active discussions
to persuade his partners and bring them round to the realisation that merger was
the best route to secure the firm’s future
and that it offered real advantage over
the other options available. With the
backing of a strong consensus, he was
then able to enter into the merger
process with confidence.
Regardless of the strategic or
management logic surrounding the
merger option, it will only be through
management of the firm’s culture that
any approach will be able to progress.
The ability to work with the partner group
and the wider firm, to change attitudes
and shape culture is a cornerstone of
successful leaders. Using the principles
of emotional intelligence to navigate these
cultural waters can be one of your most
powerful tools.
NON-VERBAL CLUES IN THE
NEGOTIATION PROCESS
Eyes. The window to the soul.
Avoiding eye contact? Something
to hide or very nervous. Constant
stare? Feeling the need to
dominate or getting angry. Looking
around? Bored and disinterested.
communicate a whole range of
emotions. It is vital for maintaining
the flow of a conversation and for
deepening our understanding of
how someone is feeling.
Eye contact is vital and can
communicate a whole range of
emotions. It is vital for maintaining
the flow of a conversation and for
deepening our understanding of
how someone is feeling.
Head. When a person is in
‘evaluation mode’, he will often
turn his head slightly to one side.
The urge to nod slightly will be
almost irresistible for someone in
agreement with you, whilst even
the hint of a shake of the head
will send the opposite message.
A crease of a smile or ever-soslightly
pursed lips convey quite
different emotions.
Arms and hands. Arms crossed
will generally be perceived as
a defensive or even aggressive
posture. Open arms and open
hands suggest that someone
is receptive. Use of the hands
to gesture and add meaning
or emphasis to what is being
said can be very effective. Many
involuntary hand movements,
perhaps touching parts of the
face, may betray nerves or a lack
of confidence or belief in what
they are saying.
Body posture. Leaning or moving
the body slightly towards a person
will show interest or agreement.
Disagreement will be evidenced
by movement in the opposite
direction, a change of posture
away from the speaker or leaning
back in the chair.
Legs and feet. Legs crossed?
Defensive. Legs uncrossed?
Nothing to hide, ready to
cooperate and trustworthy.
Feet flat on the floor send the
same positive signal. If you see
someone’s feet have changed
position and are pointing towards
the door, then it’s time to bring the
discussion to a conclusion.
Evaluating targets
Having embarked on a merger-based
strategy for growth, the next stage
is to create a clear understanding of
the characteristics of any prospective
candidate firm. Such analysis will typically
be built up from public domain sources,
supplemented with any insights that
can be gleaned from third-party sources
such as intermediaries and the personal
knowledge of the partners.
At this stage, the focus will be on
considering the ‘paper fit’, but it will
also be important to consider, as far as
possible, cultural issues. Some partners
will be keen to give you the benefit
of their opinion as to the suitability of
potential candidate firms (whether based
on their personal experience or what they
have gleaned from the rumour mill).
You will need to make value
judgments about the opinions that are
expressed, based on perceptions of the
objectivity of the source and whether
or not any self interest is at play. While
the clearly-expressed views of someone
known to be fair and objective may carry
more weight than the opinion of someone
with clear self interest and a bias towards
a particular firm, most feedback will be
more nuanced and the political position of
the source less clear.
Interpreting the signals provided
by tone of voice and body language,
combined with a good understanding of
the emotional drivers of the source, will
be key in deciding how much weight to
attribute to information provided.
UNDERSTANDING YOUR
PARTNERS’ DRIVERS
The personal circumstances, career
stages and ambition of partners in your
firm will vary significantly. It should be
no surprise therefore that their reaction
to any merger proposal will also differ.
These could include:
All I can see is opportunity, where
do I sign up?
I was hoping for a quiet final few
years to my career, this looks
like turmoil.
Worked there once. Hated it.
Time for me to dust off the CV
and hit the recruitment market.
They’re a good firm but we’re
better. Naturally I’ll be the head
of the new department (a thought
that occurs simultaneously
across a number of partners
in both firms!)
They don’t have a practice like
mine, what a great opportunity to
expand my client base.
They don’t have a practice like
mine; this means I’m ‘off-strategy’,
surplus to requirements and will
be shown the door in due course.
How much is this going to cost?
What about my profit share?
This sounds like years of tribal
warfare and the death of the
culture we’ve prized for so long.
I’m sure this will work out well
and allow us to address some of
the underlying issues which we’ve
been aware of for ages.
It should be clear that the same
aspect of a proposed merger will
send completely different messages
to different partners. The negotiating
team needs to avoid being overcome
by ‘group think’ and retain its ability to
see the proposal through the eyes of
individual key partners and important
constituencies within the firm. By so
doing, it gives itself the best chance of
dealing with objections and securing
approval to proceed.
Assessing cultural fit
There has been much written about
the importance of cultural fit in merging
firms. However, understanding what this
means in practice, mapping culture and
analysing how the coming together of two
organisations will play out, is as much art
as it is science.
Many merger discussions fail to
get past the first base because the
negotiation teams do not perceive that
the two cultures will be able to integrate
successfully. While the paper fit may be
superb with potential synergies across
clients, geographies, sectors, practices
and cost bases, it is often a lack of belief
in the cultural fit that scuppers the deal.
Such differences may be manifested
in physical structures or processes (or the
lack of them) or simply as a ‘gut feel’. For
example, a firm with a more delegated
style of management may perceive
inefficiencies and sluggishness in a
merger partner that is more consensual
in nature. Looked at through the other
lens, the more authoritarian approach
may be viewed as bullying, divisive and
ultimately self destructive.
Both psychological responses may
be valid, but the emotionally intelligent
approach would be to examine the reality
of each perspective and the entrenched
position which has developed. In many
situations, the biggest barriers will be
those of language and perception rather
than the day-to-day operating models
of the firms. These will likely be very
similar in many key areas, creating a new
perspective for both parties and thus
allowing compromises to be identified and
progress made.
Due diligence also needs to look
beyond matters of finance and risk into
operational management and the strength
of the client franchise. Dig deeper than the
stated policies and procedures to consider
how effective they are in practice, how strongly they form part of the cultural web
of the firm and how behaviours evidence
them in practice.
Managing negotiations
In any negotiation, some points become
matters of principle or precedent carrying
far greater weight than one would expect
from a logical analysis of the situation.
They are potential dealbreakers, so it is
important to recognise them as early as
possible in the negotiation process.
The most obvious example is the
naming of the merged firm. Where the
new name is to be some form of
combination of the old, for example,
which antecedent firm’s name appears
first? Law firm mergers are littered with
the clumsy and often unpronounceablein-
a-single-breath consequences of
compromise on this issue.
Other examples might include the
naming of practice groups – is it to be
real estate or property, dispute resolution
or litigation? This may be perceived as
showing dominance of one side over
the other. Similar tensions can arise
over job titles with the terms lawyer,
solicitor, associate, director all being used
interchangeably by firms but with a need
for consistency in a newly-merged entity.
All too often, the underlying sentiment is
“I don’t really care about this provided it is
done my way!”
By having an awareness of possible
emotionally-charged issues and their
context, it is possible to manage
discussions, deal with misconceptions
and identify possible compromises at an
early stage. Ignoring such matters until
late in the process – whether through a
lack of awareness or an unwillingness to
table them – represents a major risk to the
overall success of the negotiation.
It is sadly the case that, in all too many
merger negotiations, the elephant in the
room is not confronted until late in the
process, at which point discussions will
often be in the public domain. Bringing
these to an end without either or both firms
suffering negative publicity is difficult to
achieve. Emotionally astute leaders will not
allow such situations to occur.
Post-merger integration
Integration has, of course, its physical and
operational aspects. The bringing together
of premises, systems, IT, structures
and processes are potentially complex
and require careful planning and good
execution. These are, however, traditional
challenges to which the project manager
and management team should be able
to rise.
More important for the longer
term success of the business will be
the alignment of cultures, ongoing
communication and engagement of people
at all levels. This is where leaders with
high emotional intelligence come into their
own; their instinctive understanding of how
it feels to be in the position of a range of
people in the firm means that they are able
to engage with empathy.
Understand that, for many, a merger
means an increase in stress and
uncertainty. The concern on the ground is
not with high-level strategy but rather with
more immediate and pragmatic issues such
as job security and career opportunities.
Being responsive to concerns such as
these, without pretending that difficult
decisions may not have to be made
to deliver any merger dividend, builds
confidence and trust in you as a leader.
Strong leadership
Strategy development and the
identification, pursuit and delivery of
a merger are activities which rely on
strong leadership. Emotional intelligence
has a central role to play in the merger
process. By developing an approach
which is centred on emotional intelligence,
you can increase your firm’s chances of
both securing merger opportunities and
delivering positive long-term outcomes
for your firm.
Endnotes
1. See ‘Emotional Intelligence’, P Salovey
and J Mayer, Imagination, Cognition and
Personality, Vol. 9 (No. 3), 1990
