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 IST Discover-E White Paper:

The Balancing Act. Six Pitfalls of Doing Business with Organizations Undergoing Mergers & Acquisitions.

Globalization and a fast-changing technology landscape have all influenced decisions to accept venture capital or merge by major players in the competitive eDiscovery field. With dreams of being “bigger and better,” the business behind growth is exciting and complex. But the question must be asked: who really wins? When a company is acquired, new managers take over; and, when companies accept venture capital, a new slate of board members enter the picture. Decisions from that point forward are typically based on market fit and profitability. Amidst the excitement, existing customers and employees are far too often taken for granted in these scenarios.

It’s no secret that venture capital is fickle while roughly two thirds of mergers lose value on the stock market. The motivation that drives these forms of company growth can be flawed and, in many cases, the problems associated with trying to make them work are all too concrete. If you are a current customer of an organization that chose to grow by merger, acquisition or accepting third-party dollars with the promise of bigger and better things, please take the following six customer service pitfalls to heart:

Pitfall # 1: Communication

Communication challenges are the top factor that causes company synergies in an instant growth scenario to fail. Communicating with employees, empowering them and creating a culture for them to thrive are all fundamental parts to any organization’s success. When mergers and acquisitions occur, employees and management are generally left in the dark. Fear and lack of answers deter top management from providing the information that employees need to redirect their actions in the merged company.

Similarly, injections of venture capital can result in employee retention issues, which result from negative attitudes felt by employees who enjoyed things the way they were. This is born of a sudden uncertainty about the future of the organization’s direction, job security, perceptions of lack of leadership and feelings of confusion due to lack of communication. In essence, employees often lose trust in their organization and feel betrayed by their leadership.

Lack of communication creates distrust and uncertainty in the workplace, leading to lower employee engagement levels and decreased performance for customers.

Pitfall # 2: Service Levels

Both leaders and customers of companies undergoing instant growth scenarios assume service levels will continue to evolve as they have done. They won’t.  These scenarios bring major organizational changes, which can lead to stress, anxiety, role conflict or the feeling of not being treated fairly for people at all levels. These feelings often impact the performance of the employees and affect future service levels at the organization.

  • There is a 23% increase in “actively disengaged employees” after a change event – even if no one’s job is affected.
  • It takes about three years to return to pre-merger engagement and thus service levels.

Pitfall # 3: Culture

Merger, acquisition or accepting third-party cash usually occurs because financial and business rationale add up, but fail to realize the cultural repercussions that may occur.  It’s easy to assume instant growth events can be a purely mechanical and scientific process. However, the people aspect of any deal is always critical as they bring shifts in management practices and strategies, which can have negative effects on the people at the organization. A sudden shift in these practices, brings disruption and palpable unease to a company.

Culture is the long-standing implicitly shared values, beliefs and assumptions that influence the behavior, attitudes and mission in an organization.

Pitfall # 4: Customer Focus

Instant growth events cause interruptions and alter an organization’s focus, mission and goals. Customer’s of an organization undergoing these events must do added diligence to make sure they know what matters to them in the deal and why. If the organization will serve some customers better than others or especially if the growth explicitly directs an organization’s core competencies away from the services currently under contract.

Does an instant growth event grow towards certain customer and away from others?

Pitfall # 5: Resource Availability

Managers may find it impossible to allocate the right resources to the right places in the right way amidst all the bluster.  Recognizing that instant growth events affect a long-standing process and subsequently impact an existing customer base benefitting from those processes, ensuring that the same or better resources are allocated to existing Customers is an uphill battle.  High growth is always underpinned with promises to make sure an organization is driving towards operational excellence in the most critical, value-creating areas. This means sales must deliver quick wins in order to generate and sustain positive momentum.

The pomp of being bigger and better can often drown out the needs of faithful customers.

Pitfall # 6: Protecting Sensitive Data

Last but certainly not least, there’s the challenge of secure integration - ensuring the IT processes, policies, and infrastructure are ready for massive expansion of system demand and/or absorption of data not previously under their control. During an instant growth period, IT managers already feeling overwhelmed by an increasing volume of cyberattack attempts must now not only ensure all data is properly transferred, but also that any conflicts between different applications are resolved effectively without creating vulnerabilities in data security systems and protocols.  Most IT managers already admit that successful hacks of their company networks have happened despite running up-to-date cybersecurity protections at the time of a successful attack.  When patching disparate systems together, security holes that haven’t been plugged or gaps in protection are sure to surface.

In terms of the attacks that succeed, over half of them are phishing attacks resulting in malware infections, software exploits and being hit with ransomware.

Ultimately, no matter how much bigger an organization is, or great the technology suite may be, if employees aren’t provided an environment where they can provide great service, the customers are the ones that typically end up regretting it. IST Discover-E is one of several legal support solutions offered by IST Management Services, the largest independently owned Business Process Outsourcing company in the US. Since being founded in Atlanta, GA we have zero ties to venture capital and have no plans to be involved in any M&A deals. Our core business has always been providing integrated software and professional support services with specialization on corporate and legal clients. Further, IST provides National support of our eDiscovery services with experts in eDiscovery recruited from AM Law Top 100 firms. Our Project Managers are excellent not just for their expertise in managing eDiscovery projects but also for their attention to our client’s needs throughout the project lifecycle.

At IST Discover-E, we have years of experience helping our clients with their eDiscovery needs along with full scale legal support management systems.  We are expert in creating and customizing eDiscovery processes that best fit our client’s needs and expectations. Our model is uniquely transparent, easy to understand and effective in aiding our clients get the decision they want for their clients.