Private equity firm Terra Firma suing Citibank over EMI deal, alleging fraud. Is it a case of taking the baseball bat and mitt and going home to sulk? Read more for the potential ramifications for M&A firms. Could get ugly.
http://www.mandachicago.com/ma_sellside_advisors_beware.html
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Predictable changes after an acquisition include a 50% drop in productivity that is not regained and sales drops between 10-60%. Up to 75% of executives in the acquired company leave within 3 years and the bleeding continues for a decade before recovery! Over the 18 month course of an average transition, there is extensive organizational “bruising” with unaddressed people, culture and process problems. Many companies drift toward improvised solutions and makeshift answers, relying on a crisis management style that keeps anxieties high and morale depressed, a recipe for sales collapse and executive flight.
It is possible to alleviate the stress of blending two distinct entities. One of the first steps is to anticipate likely scenarios instead of hoping that they don’t come up. Do not simply hope that there is a chance for success – instead, leave nothing to chance.
Establish Clear Direction
Usually a key executive receives the job of operationalizing the deal. He or she should focus on developing a 24-month strategy and vision for going forward. The first instinct is to cut away redundancy, deal with overlaps and release surplus employees. Instead, focus on engaging both organizations and evaluating core processes for synergies. You’ll have your chance to reduce one-time and recurring costs.
Make a Solid Plan & Process to Implement
Engineering the integration of core processes is the most important planning you’ll do. Often the buyer comes in and simply institutes their policies and procedures by fiat. This top-down model fails to unlock synergies from the ground up. It is counter intuitive to allow synergies to emerge rather than getting everyone on the same page, fast. But it is a critical phase that releases the true value of the deal. With new processes identified, link the new structure and budget to them, not the other way around.
Engage, Engage, Engage
People are not processes. It’s tempting to put them into a mass category and feed them platitudes, coffee mugs with slogans and t-shirts about teamwork, but your people are watching to see if your words match your actions. If you act incongruently, they will cease listening. They are the team that will carry out and implement the new vision. If they’re on board, you’ll see things move smoothly; if they’re not, resistance, balking and negative talk can torpedo your efforts. Engage them on every level.
Leverage Predictable Dynamics and Timing
Two I.T. departments or two marketing departments are going to get along famously. No? Recognize the realities of the situation and develop strategies for leveraging heightened competition and an expanded knowledge base. Anticipate reactions at each stage of the merge and you’ll be way ahead. Shock gives way to uncertainty which gives way to acceptance and new development challenges.
Lead with Courage & Persistance
Leading this initiative, you’re in the cross hairs. Supporting policies and procedures have to be developed to reinforce direction, structure and processes. Many voices, interest groups and individuals will attempt to influence your judgment. M&A is the time when you tap into your leadership potential and rise to the challenge. Nothing less will do.
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We have identified some general barriers that stand in the way of most quality organizations, that keep them from achieving a much higher degree of success.
Barrier #1: Accomplishing Goals
Although all organizations set goals, few have a process in place for achieving the goals they set. Most organizations set annual goals. Yet most have a poor track record accomplishing the goals they set.
Barrier #2: A Chance for Success Approach
Most endeavors (projects, tasks, assignments) are approached with an attitude that provides a “chance for success.” There is a big difference between a “chance for success” approach and a “leave nothing to chance” approach.
Barrier #3: Lack of Commitment
It is far easier to generate support for an endeavor within an organization than it is to gain commitment.There is a big difference between commitment and support. As a general rule . . . One person who is committed is worth 100 people who are supportive.
Barrier #4: Lack of Accountability
Most organizations lack a strong measure of accountability. Many individuals will agree to goals, projects and assignments without being prepared to be held accountable for progress towards those goals or assignments.
Barrier #5: Procrastination
Leaders often go weeks, months and years wanting to work on their organization, only to continue to believe that the right time is anytime but the present. Procrastination is an important part of indecision.
Barrier #6: The Service Delta
All of the positions within our organizations involve significant discretionary effort. Many individuals function far below their maximum abilities. Most organizations have a significant Service Delta.
Service Delta represents the difference between the actual effort a person is putting forth and the maximum effort they are capable of putting forth
Barrier# 7: Lack of Vision
While most businesses have a Mission Statement, they do not have a Vision Statement that really motivates all employees to do their very best work. A Mission Statement does little to reduce the Service Delta within an organization.
Barrier #8: Lack of Concentration
Most employees are interrupted in one way or another many times each hour. These frequent interruptions have led to a pattern of weakness within many organizations. When was the last time you spent more than two hours concentrating on one issue or problem?
Each of these barriers can have an adverse impact on the success of your organization.
Removal of any of these barriers will have a positive impact on most everything you do. After identifying the Barriers to Success, we focus on developing 5 Keys to Developing Greater Excellence:
Key #1: Elevate Your Vision
In order to get an organization to function like a team, the employees need a common vision that really motivates them to not only work together, but to also do their very best work.
Key #2: Regularly Measure Progress
Your report card needs to include much more than just financial data. What is a process? Gradual changes that lead to a particular result: A series of actions or operations conducing to an end.
A repeatable business event that affects our overall business in either a positive or negative way.
“Amateurs practice till they can get it right. Professionals practice till they can’t get it wrong.”
Key #4: Use a Strategic Goal Process
To create a high achievement culture, organizations must use a goal setting process which allows them to accomplish the goals they set. Organizations should set strategic and improvement goals.
Key #5: Adopt a Process of Accountability
“If people are not prepared to be held accountable for what they do, it is unlikely they will achieve much. To choose a goal without being prepared to be accountable for progress towards it is to choose nothing.” – David H. Maister
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