26 Jun Acting on, and with Purpose
It was with much interest that I read the latest FT article from Blair Effron titled ‘Tighter Times means tougher corporate choices’.
The main thrust of his piece centred around the concept of ‘more for less’. Average EPS in 2020 will be down, many companies will be financially constrained but desperate to take advantage of M&A opportunities as they will no doubt appear in a rapidly dynamic socioeconomic environment. One compelling reason for change will be the need to acquire innovation as the pace of change outstrips the ability of a company to grow organically.
Taking the above example further. How do we get the deal right first time? We no longer have the luxury of multiple visits to the investment table and with typical M&A success rates of 50% – 65% it’s not just your reputation at risk. It is time to be different.
Focus relentlessly on purpose. Not just in its creation and communication but in the alignment across cross company teams. In M&A alignment on purpose has to be created and maintained in leaders (who create the purpose or reason for change) management (who drive the change) and the broader workforce (who are the change). For the first two groups change driven by M&A remains mostly event driven. Day 1 communications and change of control being two examples. For the broader team, change is more of a process over the longer term; change programmes should be sustainable and inclusive where team members are allowed to find their own passion for the purpose and motivation to accept change on an ongoing basis.
Focus relentlessly on purpose. Use this purpose to test your ability to answer the following questions:
Will this deal…
- Add strategic capability
- Impact business resilience;
- Deliver financial benefits & returns;
- Increase organisational ability
If you’re not able to answer at least one of these questions with your purpose could this be the wrong deal or is it better to allocate capital on an ok deal than no deal at all?
Build the answers to these questions into your internal and external communications and make them drive your integration plans.
Focus relentlessly on purpose. Use your purpose to create a compelling reason for change, a clear vision of the future, in terms of organisational change and a credible plan to get there.
Will you be able to realise deal benefits, when, at what cost and by whom? Can you use your purpose to align your teams on the organisation’s ability to achieve value creation goals and adjust to new opportunities and priorities whilst maintaining business performance and minimising commercial risk? Use the answers to drive your DD streams to think not only what has been but what needs to be.
Finally, focus relentlessly on purpose. Value the purpose enough to fully prepare for success. Most deal makers will focus attention on the various DD streams, funding, negotiation and contractual matters. Whilst all these are vital for ensuring the transaction completes, they do not equate to realising the purpose.
Both your organisation, and its leadership need to be ready. Your leaders need to be ready to lead change and your organisation needs to be ready to accept change.
Change readiness can be focussed by collaboratively created organisational change plans. By linking purpose to measurable benefits and workshopping the changes required and your team’s part in that change pre deal you will quickly discover the ‘mind the gap’ areas that need to be addressed before the purpose can be realised. Typical areas that could need addressing include cultural as much as technological areas and any area of operating model change needs to be planned, costed and included in the acquisition model and ROI case.
There will be a dynamic bout of deal making over the coming months and leaders will be under pressure to take advantage of the situation. Pace and focus will be required as will expert support to ensure deal readiness, and this is where BTD can help you by shifting the M&A narrative from ‘why’ to ‘how’.