Inarticulate ramblings of a management consultant

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

The love affair between Fintech and financial services – unrequited?

Large consulting firms buying / investing in small specialists
Telecommunications giants buying / investing in tiny adtech ventures
Banks and insurance companies buying / investing in owner managed fintech businesses

Once again we are on the crest of a wave of mergers and acquisitions whereby the very large swallow the very small.

I’m not at all confident that we won’t have the same result the last time this happened…in the late 90’s when the likes of Nokia and others attempted to buy innovation through a series of very small garage / basement based tech driven ventures.

I’m drawn to a medical analogy. The success of a kidney transplant is as much due to the quality of the kidney as to creating a receptive environment where it can work. In the world of medicine, I understand this involves immune response suppression, often for a prolonged period, to avoid the body rejecting the new organ.

What happens when a very large business with lots of market access, reputation and customers invests in a very small one with disruptive technology…which threatens to cannibalise the very basis on which the lives, careers, and employment prospects of a significant portion of mid and senior level managers depends? Even if the relationship is based on funding, or data sharing, what incentive exists from a vested interest perspective to cooperate?

Turkeys and Christmas

What happens when a small number of highly motivated and driven subject matter experts who work because of a burning desire to change their particular market through innovation, flat structures, super fast communication and aligned ownership attempt to deliver their solution in a large, highly regulated, siloed organisation with many deep vested interests?

Square peg, round hole

What happens when speed of response and agility (generated by the desperate need to generate cash flow and maintain the dream) meets with considered, process driven, conscientious leadership which through sheer scale is forced to manage through socialisation and consensus?

At the risk therefore of stating the bleeding obvious, if you’re the sponsor behind one of these deals, what do you need to do to make it work?

Managing vested interests

  • Map your stakeholders carefully into three categories according to impact on their business (positive or negative) and capability to disrupt. Being extremely conservative in this process is a good strategy.
  • Identify interested parties at an individual level below the stakeholder group. Finding like-minded people within your business who will get as excited as you at the potential the acquisition has to offer starts to create momentum at different levels. Engage and connect them with their counterparts in the acquiree as early as possible.
  • Be prepared…you need to have complete clarity in terms of the impact on existing functions (job losses, job changes, time frames, costs, systems integration challenges etc) to be able to deal with spoken and unspoken challenge.

The role of the interlocutor

  •  It is an undeniable fact that despite the appearance of similarity in terms of sector, business need, technology, the acquirer and acquiree will speak a different language, in particular around delivery. You need to learn it and be prepared to translate for your colleagues.
  • As the primary point of contact for your colleagues at the acquiring bank / insurance company with regard to the acquisition, your knowledge of the people, business and technology needs to be watertight. Be prepared to repeat the same messages consistently and extremely often!

Manage retention and manage your retention targets carefully

  • Turn the commonly held perception on its head…think about the acquisition in terms of 0% retention, not 100%. Who do you need to retain to make this work? What are the individuals’ motivations, who has common interest with them, how can you bring them onboard so that they see beyond the grey monolith?!

Appealing to the most basic of human interests (money) does not amount to an integration strategy.

Categories: Mergers & acquisitions, post acquisition integration, Post merger integration, Transformation, Value Preservation

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