In FinTech, Mergers and Acquisitions (M&As) are incredibly commonplace. As DC Advisory highlights, as AI is maturing within the tech industry, more functionality is being sought after by FinTech companies to help with traditionally resource-heavy tasks and the ever-evolving challenge of fraud prevention. Traditional Financial institutions are finding it not just necessary to adopt these changes, but also much easier, cheaper, and faster to acquire expert teams and products than trying to build it in-house from scratch. This trend aligns with broader FinTech M&A and strategic partnership movements, as explored in this White & Case analysis.
From a technical perspective, joining forces in a FinTech M&A makes perfect sense. However, the human element can introduce challenges that complicate the process. Fortunately, in our experience, these human factors tend to be consistent across industries. As leaders, there are a few key actions we can take to ensure a smooth and successful M&A integration.
1. Understand the Current Reality
Due diligence in a FinTech merger isn’t just about what’s written on paper; it’s about also understanding how the other team operates day-to-day. Are they a team of self-starters with high levels of autonomy and might feel restricted by rigid structures and fixed scopes? Alternatively, are they used to highly detailed structured plans, making it challenging to adapt to uncertainty?
There is no single “right” way, but it’s important to understand and recognise these differences early to manage the transition smoothly and avoid unexpected challenges post-merger.
2. Managing the Cynics
Whenever there is change, there will be people against it. Their reasons will vary from wanting to stay comfortable, to believing that it’s a complete waste of time. We call the latter, the Cynical Mindset. This person believes the task will be impossible, pointless and difficult to persuade otherwise.
Managing this group of people during a FinTech M&A is going to be crucial, as their cynicism can easily influence others around them, fostering a hostile and stagnant work environment. Over the years, we’ve found that calling the cynics out on their comments can be difficult, and they might justify their actions as simply being realistic.
At Breakthrough, we believe that You Cannot Outperform Your Mindset; what you perceive as reality shapes what you believe is possible. For cynics, the belief that something is impossible becomes their reality. In contracts, those with what we call a Magical Mindset, see limitless possibilities as their reality. By helping your team recognise the power of their mindset, you can cultivate a work culture that embraces change.
Learn more from CAVU on why cultural transformation is critical in M&A integration.
3. Seek Alignment, Not Agreement
Finding complete agreement between individuals is an almost impossible task, much less a whole organisation. Instead, look for alignment on the overall goal and direction (i.e. the why).
Imagine this: You’re going out to get groceries, but you’re waiting only until all of the traffic lights on the way are green, and traffic is completely clear. That’s never going to happen.
Once both parties in an M&A integration can align on their overall goals, whether it’s stronger innovation, increased revenue, or increased market share, they can begin working together to determine the best path forward. Focussing on agreement often highlights differences, while alignment creates common ground - what some might call “the bigger picture.”
Struggling with leadership pitfalls in rapid growth? Read this blog post to learn more.
4. Check-In Regularly
We trust that when it comes to FinTech M&As, leaders go further than just “completed”. Most leaders plan 1, 3, or even 5 years ahead, but this alone isn’t enough, especially if progress reviews only happen once a year.
In our experience, the success of an M&A integration is directly related to the number of progress review touchpoints. To build and sustain Full-On momentum, onboard key stakeholders and internal champions as early as possible. Check in with your champions regularly, and establish clear integration milestones and find a cadence that works for your business, whether it’s quarterly, monthly, or even fortnightly.
.5. Full-On Momentum
We strongly believe in having Full-On Momentum throughout the process. Often with a task or project, we start slowly, then build up to Full On Momentum at around the midway point, then have to rush into Overload to try to finish on time, and overrun at the end.
Some may believe that once all the paperwork has been completed and teams have finally met, the work is done. This couldn’t be further from the truth. In fact, this is where most stumble in FinTech mergers–when the ‘transaction’ has been completed and the momentum for M&A integration fades . Leaving no time, energy, and resources left for the implementation phase.
These are our 5 essential tips for successfully navigating M&A Integration, especially in FinTech M&As. Many of these tips are derived from our Breakthrough Tools and Concepts. If you have experienced this before in your organisation, or especially if you’re experiencing it now, please get in touch at contact@breakthroughglobal.com or here and we can partner with you for a successful integration.