The Value of the Mediator in M&As

Merger and acquisition (M&A) transactions often lead to organisational failure in the resultant company. Some management theorists believe the key to success could be interactive planning in the M&A process – a management tool that involves the use of mediation techniques.[1]  

So, what is interactive planning and how can mediators help?

Interactive planning

Interactive planning involves stakeholders coming together to envision an ideal design for the future company, prior to completion of the deal. The chances of all the stakeholders agreeing on the best or right ideal design is slim, and so the process requires them to explore various scenarios, think flexibility, and engage in integrated bargaining (also called ‘interest-based’ bargaining, or ‘win-win based bargaining’) – a negotiation strategy often used by mediators. This requires stakeholders to reveal their underlying interests and work together to develop mutually beneficial agreements, orienting the negotiation towards a long-term vision for the future.

The Mediator’s Role in Interactive Planning

The Mediator plays a crucial role in facilitating the entire process. The diverse group of stakeholders involved in the design and planning stages will have wide ranging opinions. As a neutral facilitator, independent of the acquiring and target companies, a mediator is well-placed to moderate this situation because their impartiality creates an environment where all parties can express their interests and concerns openly without fear of bias. This is vital because stakeholders will be unlikely to implement the ideal design if they did not help in the creation of it, or feel they were not listened to or if they simply do not understand it.

A mediator plays a crucial role in integrative planning by moderating and ensuring each stakeholder is present, participating and cooperating throughout the entire process. On a practical level, the mediator can influence the location to assist stakeholders to stay focussed. The mediator’s facilitation may also extend to controlling and monitoring phone usage and external communications; and deciding whether stakeholders should stay overnight at the venue in the hopes of facilitating communication out of hours.

Once the stakeholders have shared their underlying interests, the process of developing these interests and coming up with creative solutions can begin. A mediator helps with the synthesis of these interests into the ideal design. At this stage the mediator can encourage stakeholders to think creatively with the aim of obtaining as many ideas as possible.

Mediation Skills and Creative Thinking

By using integrated bargaining techniques, the mediator can encourage creative thinking, and aid in producing alternative concepts and perceptions between stakeholders. Their presence helps to encourage stakeholders to look beyond their own preconceived notions and beliefs and encourage flexibility regarding the future of the business. 

The mediator can also help stakeholders realise that their individual interests can be satisfied in a different way, that may suit others better. With the mediator’s assistance, the group may reach agreement on an ideal design that is mutually beneficial and helps to satisfy the interests of the majority.

It is difficult to ensure the success of mergers and acquisitions. The already complex process is not made any easier by the differing, and often clashing, interests held by the various stakeholders. Considering the benefits of mediation type skills and approaches in this context and the role a mediator plays in interactive planning, it seems sensible to ask; should mediators be more regularly involved in the mergers and acquisitions process?  

Hannah Jordan, future trainee of Shepherd + Wedderburn LLP, August 2023

[1] J. Carlton Sims, Merger & Acquisitions and Mediation, ADR Times, 1 August 2022 (accessible here)