Are we always going to spend countless hours on planes to get to sit in meeting rooms with colleagues?
This morning, as I sit on yet another flight, this time from Singapore to Hong Kong, it’s ever more apparent to me that far from video conferencing and other forms of communication taking the place of international travel, planes are fuller than ever with business travellers flying short distances for a schedule of meetings, which from my own straw poll over the past 18 months, are mostly internal to their […]
I’m working on a couple of transactions at the moment and was reminded recently again of the critical role that an exiting CEO can play in smoothing the path of a deal, often at its most important phase, in the post merger integration. For those of you who have been involved in M&A, you will recognise the quintessential challenge which an acquirer faces in dealing with this individual. The facts are relatively straightforward:
- He / she will be one of the first casualties of the deal. Typically given the nature of the deal marketplace, the new CEO is appointed by the acquirer and rarely comes from the acquired business.
- Financially, the exiting CEO will be looked after…either through a short-term retention package or through a settlement around redundancy, giving him / her the relative freedom to make some personal decisions about what to do next.
Accepting this as the status quo is in my opinion a mistake, particularly in cases where the CEO concerned has played a key role in the development of the business, leading to its sale and continues to be valued by the employee base. He is likely to have been involved in the hiring, mentoring, and career development of key people, notably his / her direct reports, who will be important in the integration process. He / she will have had an impact on the culture of the organisation in the way that decisions are made, where autonomy sits in the corporate hierarchy, what level of risk appetite exists and perhaps in the flow of information around the business. He / she will have had a role to play in the informal organisational structure, where the key influencers sit and how they interact. Now, without doubt, having him / her around can be more than awkward for the incoming CEO. There is the potential for a disruptive influence, for a lack of clarity around who the ultimate decision maker is, perhaps even for the creation of some kind of corporate terrorist who will actively undermine the new direction of the business. There is also the possibility that he / she does not want to be involved in the next stage of the company’s development. Clearly these are all unacceptable and need to be dealt with quickly. However, let me create an alternative scenario. Let’s consider the role that this person could play given their unusual position in the merging organisation and with the appropriate good will:
- An initial engagement between announcement and completion which focuses purely on the prevention of value destruction…retention of key individuals, strong and well directed communication around the transaction as much as that is possible, engagement of the key customers maintaining service standards and relationship management during a disruptive period. In fact, in my experience this period has significant potential for major value destruction as the attention and focus of key people drifts to the prospects of their immediate future.
- A role around Day 1 and for the first 100 days which is as chief communicator and translator / interlocutor for the acquired employee base, using that trust, those relationships and that intimate knowledge of how the business works to create some stability in the critical initial period. I’ve worked on several transactions where the exiting CEO used his influence to translate the requirements and expectations of the acquirer to his workforce, giving an understanding of culture and work processes which removed the emotion from the deal.
- An adviser to the integration steering committee, to be used as necessary to comment on and provide insight on direction, plans and key initial activities.
And in return for these important actions, a compensation structure which is firmly linked to some initial KPIs around key employee and customer novation / retention, effectiveness of communication flows, and perhaps stability of revenue / cost post completion. I read in the FT and indeed many of my colleagues are suggesting that there is an upturn again in the deal volume being experienced. Having spent 14 years consulting in this arena, it would be great if we could finally move away from the cycle of value destruction and find some new solutions to an old problem. Using the insight, relationships and knowledge of an exiting CEO might be a small step in the right direction.
With thanks to Toby Tester for this topic, I wanted to explore a subject which has been close to my heart for more years than I can say. How did we get to a situation where the presumption is that human capital productivity stays constant in periods of intense change? I know this blog is supposed to be a series of incisive commentaries based on personal consulting experience but the […]
With thanks for an excellent seminar last night by Thomas Martin of Forward Intelligence Group and previously Microsoft, and also a reflection from a number of other clients and colleagues, I’ve been observing an interesting series of phenomena in the last few months. A redrawing of some of the traditional boundaries between transformation and business as usual activities, specifically when it comes to allocation of CAPEX. It seems that there […]
For many of us and indeed for many of my clients, the activities of global functional leadership can be a source of frustration and occasionally extreme irritation. That’s not to say that the individuals within those functions are not performing to the best of their ability and don’t have all the right intentions for the business. Indeed one might say that to have reached that position requires talent, a strong network and […]
Now before you all bombard my blog site with death threats, this is not going to be a diatribe against the qualifications which are prevalent in the arena of programme and project management. I fully accept that these have a place and a value, and for someone starting out in the world of complex programme / project management, having the confidence of this type of certificate is clearly important and […]
For several years, I’ve been drawing the same picture…the one which illustrates that the percentage of a company’s activities related to business as usual versus that related to what I call ‘special projects’ has been changing over the past ten years, in favour of the latter. By special projects I mean: mergers and acquisitions joint ventures new product launches new territories expansion significant change in strategy and subsequent implementation requirement […]
Originally posted on Paul4innovating's Innovation Views:
Let’s start with some defining statements. Innovation is totally dependent on becoming aware of external ideas and the knowledge that is needed and then translated for it to become new innovation. We can ‘fall over these ideas’ or we can find ideas or concepts through explicit search. Then to translate these and turn them into something new and different we need to…
Much of my work in recent years has been to work with senior managers who are looking for some kind of a magic bullet to give them an insight into their organisation…a data set which: They can trust where the ‘provenance’ is clear and consistent. The consistency in particular has to relate to qualitative experiences they’ve had with their employees or other relationships they have internally or externally Relates to their own experience either […]
It may seem strange to those of you who know me that I’m in the profession of planning otherwise known as project / programme management. For years, my life was anything but planned, work opportunities seem to occur through a combination of chance and happy circumstance. Obviously it’s been easy to post rationalise my various moves (!) but the reality was very different. That was not however due to a […]
Rights Or Obligations: Which Is It Going To Be, Scotland?. This comes from a blogger whom I’ve been following around his observations around Scottish independence. However the application of a bill of obligations / as opposed to rights has the potential for application in a corporate environment as well. An interesting concept for future change management initiatives?
I suspect that the phrase most often heard and rarely delivered against in the transactions world is ‘people are our most important asset‘. It’s right up there with ‘there’s a natural cultural fit between our two companies‘ and ‘this acquisition will be earnings accretive in x years’! Why does the tendency to make statements based on zero knowledge and little chance of delivery continue in a market situation which has […]
I often think that I’ve dedicated the last 14 years of my consulting career to an activity which is entirely defined by the famous quote about madness…to paraphrase, doing the same thing over and over and expecting a different result. Why is this? The reason is simple: Mergers and acquisitions offer opportunities for CEOs in every type of situation; defensive, growth orientated, focused on the need to diversify geographically or […]
While we’re learning more about Asian style and culture as a result of companies shifting manufacturing and other operations to China and other Asian countries, there’s a big gap in our understanding about the allocation of capital, how Asians make decisions, and how they run their businesses that could turn out to be our undoing. For more than two centuries, capital has traditionally flowed from European countries and the United […]