To start, let’s be honest, from the strategy development realm we get up on the shoulders of thought leaders such as Drucker, Peters, Porter and Collins. Even the 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 organization turnaround industry’s bumper crop. This phenomenon is grounded from the ironic reality that it’s the turnaround professional that often mops the work from the failed strategist, often delving into the bailout of derailed M&A. As corporate performance experts, we’ve got learned that the entire process of developing strategy must are the cause of critical resource constraints-capital, talent and time; simultaneously, implementing strategy must take into consideration execution leadership, communication skills and slippage. Being excellent either in is rare; being excellent in the is seldom, if, attained. So, when it comes to 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, may be the hunt for profitable growth and sustained competitive advantage. Strategic initiatives demand a deep idea of strengths, weaknesses, opportunities and threats, and also the balance of power from the company’s ecosystem. The business must segregate attributes which can be either ripe for value creation or susceptible to value destruction like distinctive core competencies, privileged assets, and special relationships, as well as areas at risk of discontinuity. With these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real-estate, networks and information.
The business’s potential essentially pivots on both capabilities and opportunities that may be leveraged. But regaining competitive advantage by acquisitive repositioning is a path potentially filled with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and other types of strategic real-estate can indeed transition a firm into to untapped markets and new profitability, it is best to avoid getting a problem. In fact, a bad customers are only a bad business. To commence a prosperous strategic process, a firm must set direction by crafting its vision and mission. Once the corporate identity and congruent goals are established the trail could possibly be paved the following:
First, articulate growth aspirations and view the foundation competition
Second, assess the lifetime stage and core competencies in 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 ranging 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, have a very seasoned and proven team ready to integrate and realize the value.
Regarding its M&A program, an organization must first recognize that most inorganic initiatives tend not to yield desired shareholders returns. Given this harsh reality, it is paramount to approach the procedure which has a spirit of rigor.
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