by Margaret Heffernan - Thursday, 6th September 2007 -

Adidas and Nike. Safeway and Morrisons. Cable & Wireless and Energis. Mergers are always headline news.

A good takeover can foment a drama that runs for months, even years. M&A activity is exciting, testosterone- driven and lucrative.

There are even those who take it as an indicator of the economic health of the nation.

Which is strange when you consider that most mergers and acquisitions fail. The deals themselves go through, and the bankers get paid. But then they fall apart.

The economies of scale that the merger was supposed to produce prove elusive. Corporate cultures and IT systems don’t mesh.

Customers get short shrift from frightened employees who are too worried about their job security to do their jobs. The strategic purpose for which the deal was invented in the first place disappears in a puff of smoke.

Depending on whose research you believe, 50 to 80 per cent of acquisitions fail to fulfil the strategic objective for which they were designed. By anybody’s calculation, that’s a high failure rate for a very expensive habit.

So it’s interesting to see a merger succeed for a change. And that’s what seems to have happened when Mobile Media and Freight Media merged.

Karen Olsen started Mobile Media in 1987, the same year Nick Lees founded Freight Media. Both companies did the same thing: they ran poster campaigns on big trucks for major advertisers.

It was a new medium and both expanded quickly. It looked so easy that lots of small operators came into the business – which scared them both, because the new companies didn’t really know what they were doing.

“They didn’t realise how much more there was to it, like running a haulage company without any goods,” recalls Olsen. So she and Lees formed a trade association to protect the reputation of their nascent business.

“Out of all those companies that mushroomed up,” says Lees, “almost none have survived. They just didn’t offer a professional service.”

Now that they had the market to themselves, Olsen and Lees competed sometimes and collaborated others. Whenever one had more campaigns than they could supply, they’d subcontract with each other.

“When the National Lottery was rebranded,”says Olsen, “we had to spend hours together working out schedules. It was that old thing, be kind to your enemy because tomorrow they might be your friend.”

Finally Olsen suggested that her company buy half of Freight Media, the half that focused purely on mobile advertising.

It helped that they’d known and respected each other for years. “We got on well while also being deadly rivals,” laughs Lees.

They knew from the trade association that they shared similar values about how business is done. And they knew that they would lose business opportunities if they didn’t get bigger.

Strategically and culturally it seemed a good fit. Most mergers do.

But then they tackled the issues so many companies fudge. From the outset, it was explicit that Mobile Media was the acquirer and that Olsen would be the new boss.

“We considered the two of us running the combined entity and we just knew it wouldn’t work,” says Olsen. There was no nonsense about joint leadership or everything staying the same.

Turning two workforces into one is never easy. “I hadn’t realised how much loyalty there was to the Freight Media brand,” admits Olsen.

“That brand was wiped away overnight. So I’ve seen every person and explained the philosophy and the benefits and that they’re now part of a bigger, better team.” It was crucial there were no redundancies.

“We’ve brought in lots of policies to make everyone feel part of the team. There’s a newsletter for drivers. And everyone’s on the same mobile network, which isn’t simple given our geographical spread. We’ve lost two drivers but otherwise, there haven’t been any casualties.”

Merger costs are high – legal expenses alone can wipe out any upside. But not this time. “I didn’t think we’d cover our huge legal fees for a year, but we’ve managed to do it in three months,” Olsen says.

“Those costs made us push hard for new business. And getting things like Live8 and the Olympic bid helped get us on the map, bring in new clients and deliver a genuine feelgood sensation for the whole company.”

They haven’t lost a single client – instead they’ve added Coca-Cola, Dell and Yellow Pages.

Nick Lees says mergers are like marriages and he’s right. Everyone talks about the wedding but it’s the marriage that’s matters.

Everyone talks about mergers and deals – but what counts is having the time, energy, and commitment to ensure that everybody can live happily ever after.