Occasionally, if you’ve been in the M&A world for a while, you’ll find a real gem of a business which an acquirer has stumbled upon and bought. It’s a moment of joy as the opportunities which the combined entity offers start to accumulate and you, as the integration director, begin to realise that the real potential is even greater.
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.
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.
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.
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?
Once again we are on the crest of a wave of mergers and acquisitions whereby the very large swallow the very small.
I’m not at all confident that we won’t have the same result as the last time this happened…in the late 90s when the likes of Nokia and others attempted to buy innovation through a series of very small garage / basement based tech driven ventures.
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.
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…
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.