Inarticulate ramblings of a management consultant

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

Mergers & acquisitions

‘Practice makes perfect’ – a model of implementing change

Last week I wrote about the interesting interaction between these three dimensions as three different strategies for implementing change. This week I want to write one particular model of implementation, which I’ve called the ‘Practice makes perfect’ model. As you may remember, the traditional method (in a Western context) looks like this: Let’s now think about some variations on this theme, and in particular what to do when you come across a […]

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More evidence of the link between culture and M&A success

Many of you will already be aware of my focus on culture in M&A and it seems that it’s becoming more mainstream to talk about these matters.. Note the recent commentary in the FT on Holcim and Lafarge which tries to downplay the cultural dimensions…perhaps part of the problem is a blind acceptance in the media around business case as opposed to delivery capability! http://www.ft.com/cms/s/3/d1cc9938-cbec-11e4-beca-00144feab7de.html#axzz3UcoE3fgH The article below is a […]

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Policy, process and practice – the three dimensions of implementation (1)

I’m working with a client on a transaction in one of the larger markets in Asia. As often happens, the chance to work with some highly motivated and able individuals leads to some new ideas. Whilst in a team meeting, this model came to my mind and I wanted to share it with you. The challenge for any organisation in an acquisition is to understand what the triggers / levers […]

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The bad news about deals….they expose structural weaknesses when everyone’s looking!

I’ve always thought about transactions as being quite different complex transformations from the ‘business as usual’ activities. There’s been a train of thought for a number of years which looks to create separate governance, resources, processes and methodology in post-acquisition integration. This is based on the requirement for different skill sets and the potential for distraction from the ongoing business. As we enter a period of increased M&A activity again, […]

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Lets stop talking about winners and losers in deals

I’m working on a couple of integration projects at the moment in various parts of Asia and, as often happens when you’re immersed in something, a sudden moment of clarity arises which is worth capturing and sharing.  One of the challenges for an aspiring CEO and his / her integration director is a recognition that M&A is not like some kind of military battle or occupation! Thinking of M&A in […]

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The three things that will determine success or failure in your deal

I was asked this question by a client this week and it caused me to think carefully. In many ways, the question is a little anodyne…as we all know, post merger integration rates amongst the most complex of transformation projects and coming up with a three part solution does not reflect that complexity.. But for what it’s worth, here are mine: (In terms of context, I’ve positioned this from the […]

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The perfect storm which has the potential to challenge the corporate world as we see it today

I have spent the last few days at the Symex Conference in Palembang, Sumatra, speaking and listening to a bunch of bright, articulate and challenging speakers. It has lead me to a conclusion about a significant challenge that corporates around the world face over the next few years….a convergence of issues or perfect storm which have the potential to change the corporate landscape as we know it. Let me set […]

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Program managing post merger integration – different from other complex projects?

I’ve had a number of very heated conversations with colleagues about the nature of post merger integration in recent weeks. The two positions are easy to understand; on the one hand, there is the perspective that a deal is just another complex transformation project with all the usual challenges. On the other side of the debate, the argument goes that post merger integration represents a wholly different type of challenge […]

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Post merger integration – in every way, an oximoron!

There’s an magnificent irony to the expression ‘post merger integration’ which, as the M&A rollercoaster starts to speed up again at an alarming pace, I wanted to share with you. In fact every part of that phrase can be challenged… Post – the reality as any practitioner will tell you, is that the work starts a long time before completion and potentially announcement. Many studies have shown that if you start […]

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Right-sizing the culture…to dimensions that make sense!

Whenever we talk about culture, it’s almost always in macro economic terms…regions, nations, industries, functional areas all seem to be easily (if often wrongly!) defined by specific and identifiable cultural traits. These traits enable us to ascribe labels to groups of people which may be relevant in terms of description but in terms of achieving any kind of change add to the confusion rather reduce it. In my opinion, the […]

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Have pity for program leaders of a post merger integration – they need your sympathy!

Imagine the following situation: You’re given the challenge to program manage a post merger integration, carried out in the public eye, with all of the details (cost, complexity, high level strategy) broadcast to the world. After a few months, you discover that actually there were a number of other people in the frame for the work, who for one reason or another, couldn’t take up the challenge! You’re given a thousand pages of diligence, written […]

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How M&A destroys value – it’s all about the small things!

I’m working on a couple of transactions at the moment around the region and one of them in Indonesia led to a moment of insight which I wanted to share. As consultants, we are frequently accused of looking for the big impact change…the magic bullet which will dramatically transform the project / or open the stakeholders eyes to a new way of doing things. In the mergers and acquisitions area though, […]

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Pray for some divine intervention – M&A may be coming back!

Whisper it quietly but it seems that the M&A market is finally returning to some very decent volumes again (http://ftalphaville.ft.com/2014/04/07/1821102/ma-is-back-ish/). No doubt the headline transactions will be the ones that everyone is focused on, not least because the old scourges of government intervention in the case of Alstom (or pure protectionism by another name) plus aggressive valuation in the case of Astra Zeneca are being played out in public. The […]

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  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.    

Transformation – the new business as usual!

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 […]

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The messy business of retention in merger integration projects

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 […]

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