To begin with, let’s face it, within the strategy development realm we climb onto shoulders of thought leaders including Drucker, Peters, Porter and Collins. Even world’s top business schools and leading consultancies apply frameworks which are incubated with the pioneering work of such innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the business turnaround industry’s bumper crop. This phenomenon is grounded from the ironic reality that it’s the turnaround professional that usually mops inside the work with the failed strategist, often delving into the bailout of derailed M&A. As corporate performance experts, we’ve got found that the entire process of developing strategy must are the cause of critical resource constraints-capital, talent and time; as well, implementing strategy will need to take into account execution leadership, communication skills and slippage. Being excellent in both is rare; being excellent in the is seldom, at any time, attained. So, let’s discuss a turnaround expert’s look at proper M&A strategy and execution.
In our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, is the quest for profitable growth and sustained competitive advantage. Strategic initiatives demand a deep knowledge of strengths, weaknesses, opportunities and threats, plus the balance of power inside company’s ecosystem. The organization must segregate attributes that are either ripe for value creation or susceptible to value destruction such as distinctive core competencies, privileged assets, and special relationships, and also areas prone to discontinuity. With these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real-estate, networks and details.
Their potential essentially pivots on capabilities and opportunities that may be leveraged. But regaining competitive advantage by acquisitive repositioning can be a path potentially brimming with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and various varieties of strategic property can certainly transition a company into to untapped markets and new profitability, it’s best to avoid purchasing a problem. In the end, a poor business is simply a bad business. To commence an excellent strategic process, a business must set direction by crafting its vision and mission. When the corporate identity and congruent goals are established the road may be paved the next:
First, articulate growth aspirations and view the foundation of competition
Second, assess the life cycle stage and core competencies from the company (or even the subsidiary/division regarding conglomerates)
Third, structure a natural assessment procedure that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities starting from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where to invest and 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 significance.
Regarding its M&A program, an organization must first know that most inorganic initiatives usually do not yield desired shareholders returns. With all this harsh reality, it really is paramount to approach the process using a spirit of rigor.
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