Inarticulate ramblings of a management consultant

the day to day experiences of a consultant operating in weird and wonderful client situations

Throwing the baby out with the bathwater – how the M&A landscape has changed in 2016

Just as 2015 was a record year for deals in a host of sectors, notably pharmaceuticals, telecoms and beer, 2016 is shaping up as the year where government and regulatory intervention is hitting new heights and the architects of those transactions are increasingly being held as charlatans and incompetent leaders. What’s more, the attack is becoming increasingly personal. We risk creating an atmosphere where all deals are seen as driven either by egomaniacal CEOs, poorly disguised attempts at tax evasion, or misguided attempts to distract from boring quarterly results!

Has the idea of growth through M&A finally been proven to be fundamentally bust or can we start to differentiate between those that are likely to fail and those that might succeed? Are there indicators which you might look for to identify potential success?

I’ve been thinking about what might feature in those indicators….here’s my list:

  • Personal track record of complex transformation (ideally in remedial situations) within the leadership and senior operational teamThe individuals responsible for the deal need to have done it before at an operational level…strategy does not count! Successful post acquisition integration is only about implementation.

Success

  • De-centralised, highly integrated corporate culture where the informal networks are strong and are supported by leadershipSuccessful implementation is about making lots of little decisions quickly, efficiently and getting most of them right. It therefore requires highly motivated individuals who enjoy and defend their autonomy vigorously, collaborate naturally across silos and build networks / relationships as a key part of their career progression.
  • Creative, passionate, powerful communications at the core of every activity
    Communications is recognised as the single most critical qualification for progress. The company delights in communication and continuously finds new and innovative ways of delivering and receiving messages. Leadership does not see the informal channel as some kind of threat to their authority but the glue which makes the business work.
  • The disciplines of project management are widely understood, practiced, and applied where possible and project governance is established centrally
    The majority of employees have worked on a project and understand the distinct nature of project based tasks. Whilst there are some dedicated resources for the project portfolio, the organisation can draw upon a large pool of other resources to work on the transaction.
    The governance for non business-as-usual activities is strong, fit for purpose and receives an appropriate level of attention from the ‘C’ suite.
  • The rationale (cost based synergies, ‘quick win’ revenue synergies and BAU performance at the target) for the deal includes a realistic and internally publicised return on investment within 24 months
    To get to that number requires broad socialisation, validation (as part of due diligence) and ultimately commitment from those who will need to deliver. The time frame is long enough to be able to deliver and short enough for key stakeholders to sign up to and everyone to remember!

Think about rating your organisation out of 10 against the above…what do they tell you about the prospects of success?

Categories: C suite leadership, Governance, Mergers & acquisitions, post acquisition integration, Post merger integration, Project Management, Strategy

Tags: , , , , , ,

3 replies

  1. Great post! Reminds me of a close family friend who’s a high ranked officer, he always used to say “everything you really need to know about military strategy is written by Sun Tzu. How you execute your strategies is what separate the wheat from the chaff”.

    It would be interesting to hear your opinion on BCG’s simplistic management displayed in six simple rules.

    Like

  2. Lots of great things in the six rules…I like the idea of decentralising and matching that initiative with funding. The challenge as ever is in the implementation. Elsewhere I’ve written about global functions as being the ultimate example of centralising roles to a point where they lose all context, capability to make change happen and influence those around them. The alternative is clearly the more attractive!

    Like

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