One of the most important aspects of a merger is to educate employees on both sides how they will be affected since they must trust each other as the merger moves ahead.
That word came Thursday from Jon H. Rowberry, president and chief executive officer of Franklin Covey Co., who outlined the merger of Franklin Quest and Covey Leadership Center a year ago. He spoke during the MountainWest Venture Group's first "big deal" luncheon in the Doubletree Hotel.Rowberry said it is a big challenge to complete a merger and keep employees; so far, the turnover at Franklin Covey has been only 5 percent since the merger was completed a year ago. He said many of the employees from both companies were chagrined and believed the company's goals for success had been abandoned.
However, Rowberry said the company is entering its third phase of the merger, which is increasing profits, and that is being done by introducing new products and services. The first phase of the merger was the negotiations and the second was the education of the employees who had a natural distrust of what was going on.
Franklin Covey received an award from the venture group because of its aggressive merger. Other companies honored for their acquisitions, expansions, public offering or venture capital funding were SONIC innovations Inc. SOS Staffing Services Inc., Mrs. Fields' Original Cookies Inc. and Weider Nutrition International Inc.
Mergers generally don't work, Rowberry said, and most don't achieve the intended success. "We were well aware of that fact when we started talking about our merger," he said.
Without using investment managers or brokers, officials from both companies hammered out the merger agreement, Rowberry said, and they had to come up with something that both boards of directors would accept. "Some people said we moved too quickly," Rowberry said, but because of the company's talented managers the merged company is moving ahead with $500 million in anticipated revenue this year.
Rowberry said in order for mergers to work, there must be good leaders to lead through difficult times, an environment of trust among employees, having a sense of "hardiness" that when things go bad leaders will step forward to make them better and having a bias for action and the courage to take steps sooner than later.