To start out, to be honest, from the strategy development realm we climb onto shoulders of thought leaders for example Drucker, Peters, Porter and Collins. The world’s top business schools and leading consultancies apply frameworks which are incubated through the pioneering work of such innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the business turnaround industry’s bumper crop. This phenomenon is grounded inside the ironic reality that it’s the turnaround professional that always mops in the work from the failed strategist, often delving in the bailout of derailed M&A. As corporate performance experts, we’ve learned that the entire process of developing strategy must account for critical resource constraints-capital, talent and time; at the same time, implementing strategy must take into account execution leadership, communication skills and slippage. Being excellent in either is rare; being excellent in the is seldom, if ever, attained. So, when it comes to a turnaround expert’s look at proper M&A strategy and execution.
Within our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, is the search for profitable growth and sustained competitive advantage. Strategic initiatives demand a deep idea of strengths, weaknesses, opportunities and threats, as well as the balance of power inside the company’s ecosystem. The company must segregate attributes which might be either ripe for value creation or vulnerable to value destruction such as distinctive core competencies, privileged assets, and special relationships, as well as areas susceptible to discontinuity. In those attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic property, networks and knowledge.
Their potential essentially pivots for capabilities and opportunities that could be leveraged. But regaining competitive advantage by acquisitive repositioning can be a path potentially brimming with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and other types of strategic real estate definitely transition a company into to untapped markets and new profitability, it’s always best to avoid buying a problem. After all, a poor customers are just a bad business. To commence an excellent strategic process, a business must set direction by crafting its vision and mission. When the corporate identity and congruent goals are established the road may be paved the next:
First, articulate growth aspirations and understand the first step toward competition
Second, assess the life cycle stage and core competencies from the company (or even the subsidiary/division regarding conglomerates)
Third, structure a healthy assessment process that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities starting from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where you should invest and where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, possess a seasoned and proven team ready to integrate and realize the worthiness.
Regarding its M&A program, an organization must first notice that most inorganic initiatives do not yield desired shareholders returns. Considering this harsh reality, it’s paramount to approach the method which has a spirit of rigor.
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