3 Secrets to a Successful M&A Strategy

The growth of an organization is simply the accumulated growth of the individual relationships that constitute it. Unfortunately far too many firms fail to recognize “this obvious fact”.. thus failing to reach their full potential in the mean-time.

This past Sunday I had the privilege of hanging out with Farley Duvall & his lovely wife Elizabeth who co-founded & run White Bull, “the champions of the European Innovation Ecosystem”. Beside the love dished out by their lovely labrador Lili, the wonderful food & hospitality, when like-minded individuals come together we inevitably talk about everything under the sun, including entrepreneurship.. innovation.. success factors.. and “exits”. On the topic of “getting to a successful exit”, there are varying factors.. and it all begins with a solid vision of “what success looks like”. From there, it’s mostly about the journey ahead, leaving no man behind & going beyond the goal-line.

With this thought in mind, it was wonderful to wake-up Monday morning to the McKinsey Quarterly article; When big acquisitions pay off. M&A’s are only one form of exit.. even if that exit is simply from a current dimension to a much larger, robust & expansive organization.

Not surprisingly, the 3 secrets to a highly successful M&A are not much different to the strategies that make any organization successful.

1. Aiming higher than due diligence

Rightly so, a due diligence process, or any initial exploratory process that outlines the potential value of an organization is only a baseline. Therefore the result of a due diligence process in any organization should only be a beginning.. and not the goal-line. Once you’ve gathered your team and you’ve explored the true potential of the organization that’s coming together, you should be able to get a multiple of 1.5 (as a bare minimum) still in the early stages of the transformation.

As McKinsey’s survey on corporate transformations found (that included mergers and acquisitions), executives managing deals in which baseline aspirations were reset by a number of robust facts after a deal was reached were four times more likely to characterize those deals as very or extremely successful than executives whose baseline aspirations were not reset.

2. Asserting cultural control

The power & influence of “culture” is far too often underestimated. Company culture is the backbone that will get you through the most challenging of times, and it will “set the bar” for every aspect of results your organization wishes to deliver. Get your company culture wrong &  you are guaranteed to never reach your full potential.. possibly loosing millions from your bottom-line in the process due to higher staff turnover & mediocre performance results. The key to company culture is “purpose”, and those companies that act purposefully are the most successful. Don’t wait for an outcome to appear when you bring company cultures together, but rather be the driver of the culture you want & need to succeed.

Once you’ve identified the type of over-all culture your new organization will require, guarantee employee buy-in by investing the majority of your time explaining the logic, benefit, and then helping your team understand what they needed to do to migrate to the new culture of a transformed organization. Finally, aggressively manage that migration by making sure that no one falls off the boat.

3. Balancing CEO involvement

Start with the CEO but address this “balancing” or focus practice across your entire top line management. The most successful M&A’s come from very focused efforts where top line management remains at an end-game strategic level, only taking on 1-2 tactical initiatives which most require their particular talents.

By filtering down accountability for execution to lower levels of middle management you will create a scalable ecosystem that will not only give you immediate benefits during the transition, but will give you a uniquely strengthened position of motivated individuals with a higher degree of autonomy and sense of urgency to achieve your desired results once the transformation has taken place.

In Summary

The golden rule of the execution of an idea is always more important than the brilliance of the thought is still key to ensuring your success. If you don’t want to wind up with a group of people with varying (and at times conflicting) cultures, beliefs, processes & engagement practices.. then following these 3 secrets will be fundamental to your success.

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