To be a ‘lame duck’ is to lose power. Or so the thinking goes. Popularized in politics, the term lame duck refers to an elected official still in office who will soon be succeeded. The official typically experiences diminished influence and authority as they await their successor’s assumption of power. President Joe Biden’s extended lame duck period since withdrawing from the presidential election, is a perfect example of a leader appearing less effective at the end of his term as the public focuses on the newcomer.
Lame ducks equally apply to leaders post-merger or acquisition (M&A), when leadership transitions result in power shifts. Yet not all leaders fall into the passive, disengaged behavior commonly associated with lame ducks. Forward-thinking leaders approach this period strategically to set the business up for success, while leaving a lasting legacy.
Ineffective leadership during transition undermine M&A deal success
Following an M&A deal, leadership at the acquired company often face a precarious position. Leaders who were once central to the business may find themselves sidelined as new management take over. Direct reports may shift alliances toward incoming leadership, as they anticipate changes in direction, policies or corporate culture. This loss of influence can lead to frustration, disengagement, and even resistance to the transition.
Three common leadership behaviors that hinder post-deal results are:
Acting Passively
Some leaders pull back their efforts, contributing little to the company’s future as they wait to see how things play out. This lack of engagement can negatively impact the company’s performance and morale. One advisor I spoke with, Tony Cotrupe, Managing Director of Meliora Advisors, recalled a deal involving two brothers who sold their family tool and die business. “With an easy one-year earnout, Brother #1 was completely absent, and Brother #2 barely showed up. Their behavior became so irritating that the buyer just handed them a check to go away.”
Leaving the Business Early
When senior leaders become especially frustrated, they may choose to leave the company early, even if it means forfeiting significant financial incentives. Another M&A advisor, Nivedita Candade, principal consultant at Manda, shared such an occurrence. “During a deal in East Asia, a highly respected senior leader resigned almost immediately after the new leadership structure was announced. Losing a position of authority is often seen as a personal and professional setback in hierarchical cultures. We had expected he would remain, and his departure significantly slowed our integration efforts.”
Sabotaging the Company
A few rare leaders actively sabotage their acquired company’s operations, acting out their frustrations in an openly negative way. “I had that experience in a prior role,” shared Mike Graham, CFO at Zekelman Industries. “Our CEO deeply connected with the founders of another company. The deal seemed a perfect match. However, the founders felt short-changed post-deal and retaliated by orchestrating equipment theft, turning our acquired team into adversaries. It was a perfect storm of mistrust and sabotage that undermined the value we sought to build.”
These behaviors may seem extreme, yet they’re not uncommon. Many M&A advisors shared their surprise when acquired leadership, once enthusiastic about the deal, become disengaged post-deal. Preparing for these possibilities by assessing leadership competencies is critical as ineffective leadership during a transition can prevent a company from achieving the desired post-deal results. Equally critical to deal success is the mindset and approach acquired leaders have during the transition. They need not be lame leaders.
3 Strategies for Being an Effective Leader During Transition
Acquired leaders have more power and influence than they may realize. Instead of succumbing to frustration, passivity, or sabotage, leaders can take a more proactive approach by investing in the transition and planning a graceful departure. This approach not only ensures continued business success but also allows leaders to leave with their leadership legacy intact.
Optimizing the transition period involves three key strategies:
Help the Business Thrive While Still at the Helm
Stay actively engaged and contribute to the company’s success. Even if your role is diminishing, your experience can help guide the company through the transition and maintain the value you’ve had a role in creating. As Robert Courtney, senior consultant with Factum Global framed it, “The ideal role of the lame-duck CEO is to preserve the asset—not make it worse.” Demonstrating professionalism and commitment in this period helps sustain business performance while playing an important role in solidifying your leadership legacy.
Set Up Successors for Success
Use your position to mentor and prepare your successor. Share your insights, introduce them to key stakeholders, and foster a collaborative culture. Helping your successor better understand the business and build the necessary relationships will enable them to step into their role successfully. A smooth leadership handover creates a positive environment for both the incoming leadership and the broader team.
Help Overcome Resistance to Change
M&A deals inherently mark a shift in strategy, vision, and objectives. Such changes can encounter resistance, as stakeholders or employees may struggle to adapt to new leadership styles, policies, or directions. Through word and deed, leaders should offer guidance and support to the existing team, helping them prepare for the changes.
In working with Clara Corona de Lau, Managing Director of BioMedica, we conducted an “Honor and Release” ceremony with her leadership team after their company was acquired by Grupo Diagnostico Aries in Mexico. The ceremony, conducted over a final team dinner, encouraged each team member to share a favorite memory and acknowledge the company’s legacy. As Clara explained, “The ceremony helped us close a cycle and kept us from falling into the ‘conquered vs. conquerors’ dynamic of M&A. It helped the team to mitigate resistance to change.”
The lame duck period following an M&A deal need not render acquired leaders powerless or ineffective. Instead, leaders can leverage this time to shape their legacy, guide the organization through its transition, and set the stage for future success. By staying engaged, mentoring successors, and helping employees embrace change, acquired leaders set the business up for success while preserving their own professional integrity. In the end, the transition phase need not be a time of decline, but rather an opportunity for purposeful, graceful leadership.