To begin with, let’s be honest, within the strategy development realm we ascend to shoulders of thought leaders for example Drucker, Peters, Porter and Collins. Even the world’s top business schools and leading consultancies apply frameworks that were incubated through the pioneering work of these innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the corporate turnaround industry’s bumper crop. This phenomenon is grounded in the ironic reality that it is the turnaround professional that always mops the work in the failed strategist, often delving to the bailout of derailed M&A. As corporate performance experts, we’ve got found that the operation of developing strategy must are the cause of critical resource constraints-capital, talent and time; at the same time, implementing strategy will need to take under consideration execution leadership, communication skills and slippage. Being excellent in both is rare; being excellent in both is seldom, when, attained. So, let’s discuss a turnaround expert’s view of proper M&A strategy and execution.
Inside our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, is the quest for profitable growth and sustained competitive advantage. Strategic initiatives have to have a deep understanding of strengths, weaknesses, opportunities and threats, and also the balance of power from the company’s ecosystem. The corporation must segregate attributes which might be either ripe for value creation or susceptible to value destruction including distinctive core competencies, privileged assets, and special relationships, and also areas susceptible to discontinuity. Within these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic property, networks and knowledge.
The business’s potential essentially pivots on both capabilities and opportunities that could be leveraged. But regaining competitive advantage by acquisitive repositioning is really a path potentially brimming with mines and pitfalls. And, although acquiring an underperforming business with hidden assets as well as other varieties of strategic real estate property can indeed transition a company into to untapped markets and new profitability, it’s always best to avoid purchasing a problem. In the end, an undesirable company is merely a bad business. To commence an excellent strategic process, a company must set direction by crafting its vision and mission. Once the corporate identity and congruent goals are in place the road may be paved the following:
First, articulate growth aspirations and view the foundation competition
Second, assess the life cycle stage and core competencies from the company (or even the subsidiary/division when it comes to conglomerates)
Third, structure a healthy assessment method that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities including organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where you should invest where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, have a seasoned and proven team willing to integrate and realize the significance.
Regarding its M&A program, a corporation must first notice that most inorganic initiatives usually do not yield desired shareholders returns. Considering this harsh reality, it really is paramount to approach the process using a spirit of rigor.
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