To begin, let’s face it, inside the strategy development realm we climb onto the shoulders of thought leaders such as Drucker, Peters, Porter and Collins. Even world’s top business schools and leading consultancies apply frameworks that have been incubated by the pioneering work of those innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the organization turnaround industry’s bumper crop. This phenomenon is grounded from the ironic reality that it’s the turnaround professional that frequently mops the work in the failed strategist, often delving in to the bailout of derailed M&A. As corporate performance experts, we’ve found out that the process of developing strategy must be the cause of critical resource constraints-capital, talent and time; as well, implementing strategy will need to take into mind execution leadership, communication skills and slippage. Being excellent in a choice of is rare; being excellent in the is seldom, when, attained. So, let’s talk about 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, could be 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 within the company’s ecosystem. The business must segregate attributes which are either ripe for value creation or at risk of value destruction for example distinctive core competencies, privileged assets, and special relationships, and also areas susceptible to discontinuity. In those attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real estate property, networks and details.
The business’s potential essentially pivots on both capabilities and opportunities that could be leveraged. But regaining competitive advantage by acquisitive repositioning can be a path potentially filled with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and other kinds of strategic real-estate can certainly transition a business into to untapped markets and new profitability, it is advisable to avoid investing in a problem. All things considered, an undesirable business is simply a bad business. To commence a successful strategic process, an organization must set direction by crafting its vision and mission. As soon as the corporate identity and congruent goals have established yourself the trail could possibly be paved the following:
First, articulate growth aspirations and understand the foundation of competition
Second, look at the life cycle stage and core competencies of the company (or the subsidiary/division in the case of conglomerates)
Third, structure a healthy assessment process 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 best places to invest where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, use a seasoned and proven team prepared to integrate and realize the worthiness.
Regarding its M&A program, a corporation must first notice that most inorganic initiatives don’t yield desired shareholders returns. Given this harsh reality, it’s paramount to approach the process which has a spirit of rigor.
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