You might think that since companies spend upwards of $2 trillion every year on acquisitions, they’re a sure thing. The truth is, mergers and acquisitions fail at a rate of 70-90%.

Despite knowing that others have failed, leaders often overestimate the benefits of their particular merger or acquisition. They think 1 + 1 will equal 3. And it frequently adds up to barely 2.

Why the epic failure rate?

The biggest hurdle companies face after a merger or acquisition is the integration of teams. Few take the time and give the focus needed to build cohesive teams.

Here’s a look at what they should be doing.

Do organizational assessments during the merger or acquisition

During the due diligence process, no one’s doing a values assessment. The bankers, lawyers, accountants — none of them are being hired to look at values. In fact, values are essentially ignored until it’s too late.

Think about it: you bring in a bunch of new people, and chances are pretty good you’ve got two different values systems. Do they align? Is there conflict?

Without some alignment in your core values, it’s nearly impossible to align your teams.

You assess for values when you recruit. Why would it be any different when you merge with or acquire a company? It’s arguably even more important because of the magnitude of the change.

When I was at CDNOW in the 90s, we merged with our closest competitor. It was called a “merger of equals,” but it was really more a 55/45 split. Most of the resulting senior management team was the CDNOW.

We didn’t do a great job of managing that change.

Without really naming it, we asked several hundred people who were joining our company from another entity to align with a new set of values. It didn’t go well.

The two companies had different values. We hired differently. We led differently. We spent money differently. We made decisions differently. We’d each trained our employees to embody those values, so we shouldn’t have been surprised by the conflict.

After the merger, once we realized things were not going well, we did a cultural assessment — what I would call an organizational assessment today.

What if we’d done it prior to the merger? Things might have gone differently.

Other than key contributors, you’re probably not going to learn about all the individual team members during due diligence. Once that process is complete, you should start doing organizational assessments as early as possible. You should understand their values, how they lead, and how they manage.

See: What Is an Organizational Assessment?

Be authentic with team members

The CDNOW and N2K merger was fairly rushed. We were both public companies at the height of the dot com boom. Everyone was losing money very rapidly, so there was a little desperation behind it.

Plus, the purpose of the merger was a bad one — we were kind of trying to take out a different competitor who was distracting us.

We weren’t authentic with the new members of our team. We said we wanted N2K’s people, that they were important to our continued business. We put in a retention plan and a bonus for people to stay on a bit.

The truth was that the people were just a means to an end. If the point of the merger was to take out the competition and not build a team, we knew there may come a point where we didn’t need many of those employees anymore.

Sometimes a merger or an acquisition is just about getting the intellectual property or the brand. Don’t pretend the people are important if they’re not. This is a business arrangement. Ultimately, if you have intentions behind the people, just state it up front and make it happen. If you only need them temporarily, put a retention plan in place so you can keep them temporarily.

See: Is it Business or Is it Personal? When Friends and Colleagues Collide

Start the integration as soon as possible

When you begin an integration, you have two sets of goals, two different products, two different customer bases. If the plan is to bring them together, you need to do it sooner rather than later.

Even if that means you’re still supporting two products, you’re doing it with an integrated team that has a common set of goals.

This is where you elevate your Chief People Officer or the head of HR or an HR consultant to run the show. It’s that important. If people are important in a merger or acquisition, then they need to be addressed first.

Often, they’re not. We wonder how it’ll affect the customers and spend time focused on that. We wonder how it’ll affect the shareholder and spend time focused on that. Then we tell the employees not to worry, that we’ll do things in an iterative way and their current job won’t be impacted. “Just go about your normal business,” we tell them.

It’s a fallacy. They’re working for a new company. Even members of your own team are wondering who else might take their job. They’re competing for their job with people who didn’t work for your company two days ago.

Be authentic and start the integration process.

Hopefully you’ve done those assessments already. Now it’s time for some team building. Act quickly to merge metrics and leaders, performance management systems, all of your organizational practices, your professional development. Everyone might need new job descriptions.

The longer you wait, the harder it gets to combat the “us versus them” mentality. There’s a natural tendency to get caught up in stories like “we always did it this way” or “they do this weird thing.”

Your language matters here. I see companies get it wrong all the time. You should be talking about “we” and “us” as inclusive of both organizations from the very outset. Instead, people often continue separating teams and projects out by Company A and Company B, Brand A and Brand B, Team A and Team B.

See: How to Develop Your Core Values (and Implement Them) in Six Steps

Put the right people in the right seats

One of the most common mistakes I see is leaders putting the wrong people in the wrong seats.

You say, sure, we’ll take that company’s head of sales because ours wasn’t working out or we never had one. Maybe you didn’t do assessments because people felt threatened by them. Or you didn’t want to take the time.

So you plug them into the role without an assessment and eventually realize they’re not assimilated into the company. You don’t have one set of values and one set of behaviors, so the new head of sales starts operating in a way that’s counter to what you want.

You’re now a leader who elevated someone that doesn’t reflect the standards, values, and behaviors you’ve been promoting. What do you do?

You don’t want them to leave because you’re afraid that’ll send a bad signal to the organization. I’ve seen too many leaders in this exact situation let it go for too long. And that person in the wrong seat really does become a poison apple. They affect the whole organization.

First and foremost, you must do your best to make sure you have the right person in the right seat. Look at values. Do the assessments. Do everything you would if you were hiring that person from the outside. Don’t take for granted that they’ll be the right fit.

If you find yourself in a position like I’ve described above, be transparent. Let people know you made a mistake.

I thought they could lead this, but there was clearly a misalignment in our values. They didn’t behave in a way I wanted our sales organization to behave, so we parted ways.

Don’t let the rumor mill be fed by ideas like the “new guys” being troublemakers or one team not appreciating the qualities the other team brings to the table.

See: Right Person, Wrong Seat: Managing Organizational Change Without Collateral Damage

Final thoughts

The same need for transparency and authenticity applies if you know you’re going to need to let people go as part of the merger or acquisition. Figure out as quickly as possible how many people will need to go and who they’ll be. Determine what you’re going to offer the people you need to stay or transition and how you’re going to treat the people who are leaving.

Remember that how you behave toward the newcomers — both those who are staying and those who are leaving — will reflect on your team’s opinions of you. If they see you slashing jobs because your headcount is too high (which wouldn’t be unusual), they know what you’re capable of and wonder if they might be next.

Whatever actions you have to take, act with compassion and transparency.

We work with companies engaged in mergers and acquisitions to administer organizational assessments and help with team integration. Contact us to see if we can help your team.