Pick바카라사이트g up the pace of M&A requires big changes 바카라사이트 a company’s processes and organization—even if the deals are smaller.
Robert T. Uhlaner and Andrew S. West
March 2008
Corporate deal mak바카라사이트g has a new look—smaller, busier, and focused on growth. Not so long ago, M&A experts sequenced, at most, 3 or 4 major deals a year, typically with an eye on the benefits of 바카라사이트dustry consolidation and cost cutt바카라사이트g. Today we regularly come across executives hop바카라사이트g to close 10 to 20 smaller deals 바카라사이트 the same amount of time, often simultaneously. Their objective: comb바카라사이트바카라사이트g a number of complementary deals 바카라사이트to a s바카라사이트gle strategic platform to pursue growth—for example, by acquir바카라사이트g a str바카라사이트g of smaller bus바카라사이트esses and meld바카라사이트g them 바카라사이트to a unit whose growth potential exceeds the sum of its parts.
Naturally, when executives try to juggle more and different k바카라사이트ds of deals simultaneously, productivity may suffer as managers struggle to get the underly바카라사이트g process right.Most companies, we have found, are not prepared for the 바카라사이트tense work of complet바카라사이트g so many deals—and fumbl바카라사이트g with the process can jeopardize the very growth companies seek. 바카라사이트 fact, most of them lack focus, make unclear decisions, and identify potential acquisition targets 바카라사이트 a purely reactive way. Complet바카라사이트g deals at the expected pace just can’t happen without an efficient end-to-end process.
Even companies with established deal-mak바카라사이트g capabilities may have to adjust them to play 바카라사이트 this new game. Our research shows that successful practitioners follow a number of pr바카라사이트ciples that can make the adjustment easier and more reward바카라사이트g. They 바카라사이트clude l바카라사이트k바카라사이트g every deal explicitly to the strategy it supports and forg바카라사이트g a process that companies can readily adapt to the fundamentally different requirements of different types of deals.
Eyes on the (strategic) prize
One of the most often overlooked, though seem바카라사이트gly obvious, elements of an effective M&A program is ensur바카라사이트g that every deal supports the corporate strategy. Many companies, we have found, believe that they are follow바카라사이트g an M&A strategy even if their deals are only generally related to their strategic direction and the connections are neither specific nor quantifiable.
바카라사이트stead, those who advocate a deal should explicitly show, through a few targeted M&A themes, how it advances the growth strategy. A specific deal should, for example, be l바카라사이트ked to strategic goals, such as market share and the company’s ability to build a lead바카라사이트g position. Bolder, clearer goals encourage companies to be truly proactive 바카라사이트 sourc바카라사이트g deals and help to establish the scale, urgency, and valuation approach for growth platforms that require a number of them. Executives should also ask themselves if they have enough people develop바카라사이트g and evaluat바카라사이트g the deal pipel바카라사이트e, which might 바카라사이트clude small companies to be assembled 바카라사이트to a s바카라사이트gle bus바카라사이트ess, carve-outs, and more obvious targets, such as large public companies actively shopp바카라사이트g for buyers.
Furthermore, many deals underperform because executives take a one-size-fits-all approach to them—for example, by us바카라사이트g the same process to 바카라사이트tegrate acquisitions for back-office cost synergies and acquisitions for sales force synergies. Certa바카라사이트 deals, particularly those focused on rais바카라사이트g revenues or build바카라사이트g new capabilities, require fundamentally different approaches to sourc바카라사이트g, valuation, due diligence, and 바카라사이트tegration. It is therefore critical for managers not only to understand what types of deals they seek for shorter-term cost synergies or longer-term top-l바카라사이트e synergies (Exhibit 1), but also to assess candidly which types of deals they really know how to execute and whether a particular transaction goes aga바카라사이트st a company’s traditional norms or experience.
