To begin with, let’s face it, from the strategy development realm we get up on the shoulders of thought leaders such as Drucker, Peters, Porter and Collins. 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 company turnaround industry’s bumper crop. This phenomenon is grounded in the ironic reality that it’s the turnaround professional that frequently mops in the work of the failed strategist, often delving to the bailout of derailed M&A. As corporate performance experts, we have learned that the entire process 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 into account execution leadership, communication skills and slippage. Being excellent in both is rare; being excellent both in is seldom, at any time, attained. So, when it concerns a turnaround expert’s view of proper M&A strategy and execution.
In our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, could be the search for profitable growth and sustained competitive advantage. Strategic initiatives demand a deep knowledge of strengths, weaknesses, opportunities and threats, plus 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 such as distinctive core competencies, privileged assets, and special relationships, as well as areas at risk of discontinuity. Within these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real-estate, networks and knowledge.
Their potential essentially pivots on capabilities and opportunities that may be leveraged. But regaining competitive advantage by acquisitive repositioning is often a path potentially brimming with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and various kinds of strategic property definitely transition a business into to untapped markets and new profitability, it’s best to avoid investing in a problem. All things considered, a poor clients are just a bad business. To commence a prosperous strategic process, a firm must set direction by crafting its vision and mission. Once the corporate identity and congruent goals are in place the way may be paved the subsequent:
First, articulate growth aspirations and see the basis of competition
Second, look at the life-cycle stage and core competencies of the company (or even the subsidiary/division in the case of conglomerates)
Third, structure a healthy assessment method that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities which range from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide best places to invest and where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, have a seasoned and proven team ready to integrate and realize the significance.
Regarding its M&A program, a company must first observe that most inorganic initiatives don’t yield desired shareholders returns. Given this harsh reality, it’s paramount to approach the task using a spirit of rigor.
For details about mergers browse this website.