In many cases, explaining the situation through some intelligent questioning is the most critical process…it leads to greater clarity about the issue, it often forces us to re-examine the situation more critically and dispassionately…
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Whatever the strategy, the option of looking for purely organic growth no longer fits with the requirements of markets or shareholders... these days not having an acquisition pipeline is the equivalent of a B-…’could do better’.
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Strategy and integration, the oil and vinegar of any deal……no matter how much you vigorously combine them, they eventually separate out again. It’s a nice analogy but why?
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What if the cultural alignment we’re told to aim for is actually harmful to the performance of the organisation?
Rather than align cultures of the target and acquiring leadership teams, research suggests you should harness the conflict for better performance.
People with a little experience perform worse than those with a lot of experience, and those with no experience - a "bathtub" curve. Each deal is different and you can't generalise on the first one and try to implement the second the same way - reinforcing the idea that M&A is a skill that needs to be learned.
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There is a general misconception that some M&A deals are people-based and others are asset-based. That’s not true…when it comes to post-deal, all M&A deal synergies result from people. Whilst this might sound like sensible advice for the post-deal delivery, it also goes right to the heart of the pre-deal strategy and valuation.
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The analogy of property sales to understand company mergers and acquisitions is both accurate and highlights a fundamental flaw in how we think about M&A deals...
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It’s easy to see why Behavioural Economics has a ‘negative’ air about it… after all it describes the irrational, non-optimal reality of being human, the flaws in our decisions, memories and perceptions. Economics, like life in general, is a lot easier when you can assume that everyone is acting rationally…
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It’s an easy but not particularly insightful assumption to make, that those who develop the strategy for a deal might not be the best equipped to manage the integration process (I’ve written previously about the different skill sets required). What’s more interesting and useful to consider is that, even within the constraints of the integration process, the dynamics vary considerably. So when you’re selecting people for different tasks it’s worth considering whether their strengths lie in sprinting or marathon running…
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M&A delivery teams are separate from the teams that work on other business transformation or change projects in both consultancies and corporates…but are M&A integrations really different from other change projects? As an M&A consultant that always felt right to me, however the more deals I do, the more I question why it’s necessary…
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All the big name consultancies have used an identical process for delivering mergers and acquisitions over the last 20 years, always sold on fear: “deals fail”, “focus on quick cost synergies”, “revenue synergies are difficult”, and “use our structured process”. They’ve been at this for two decades and we have yet to see headlines that deals are now more successful as a result. We are here to turn the industry on its head, challenge how everything is done and show that there is another way.
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I’ve found that my most successful projects are the ones where a team of people comes together to create a ‘playbook’ or ‘blueprint’ for what they want to achieve. That’s included integration playbooks, go-to-market strategies, revenue management practices, and even working capital reduction projects. The alignment that you’ve created around a shared vision and way-of-working is the true value.
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Practical application of System One/Two thinking, popularised by Daniel Kahneman, can be found across leading consumer businesses, at least in their marketing departments. We’re yet to see it get widely used by Internal Comms teams in M&A.
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You’ve read the articles saying most M&A deals aren’t successful, so you’ve put in place a project team to deal with the complexity of the task. Surely if an integration managed by this standard approach fails it’s a fair assumption that it failed because the methodology wasn’t adhered to rigorously enough. All that is needed for success next time is increased control and planning…right?
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