With a 70% failure rate for mergers and acquisitions, a well-mapped transition plan is instrumental for successfully leading organisational transformation.
Superior growth and value creation involves the successful combination of:
- Achieving linear/organic growth (through superior sales and marketing systems), and
- Capitalising on transformational/leapfrog opportunities (that involve mergers, acquisitions and joint venture initiatives)
The nLIVEn “4D Change” framework is based on integrating theoretical best practices with real world experience. It is designed to help leaders successfully navigate change to adapt their organisations in a sustainable way.
Mergers, acquisitions and joint ventures have big upsides, provided you can achieve real synergies and avoid the downsides. Unlocking lasting value needs to come first from revenue growth and second from cost efficiencies – not the other way around.
Stage 1 – Discover
Finding suitable partnership opportunities takes time and practice. During this “courting” phase, both parties are learning more about why they may be attracted to closer collaboration. This is an informal stage of getting to know each other and understanding the nature of each other’s business, brand, personality, clients, team members and style.
The key outcome from this stage is clarity in the form of a conceptual agreement about what mutually attractive possibilities could be contemplated. nLIVEn provides a “Change Ready Review” to assist both parties converge on a common picture of a desired future.
This period usually moves into a “dating” phase as the parties begin collaborating on some projects together – a kind of test-drive of what it would be like to work together on a regular basis. This phase normally culminates with one party making a written “proposal” to the other.
Stage 2 – Design
A business case needs to be established that quantifies the financial proposition. Opportunities that add a minimum of 50% incremental value (predominantly from revenue rather than cost saving synergies) may be worth pursuing.
Acknowledgement and acceptance of the proposal that has been made elevates the intentions of both parties to a point where the process of formalising an agreement (such as a MOU, MOA or Heads of Agreement) commences. This phase involves forming the implementation team who will be responsible for “doing the deal” and articulating design principles for the transformation under consideration. Several options may be considered before the best model emerges. This stage concludes the co-signing of an “agreement” which defines the opportunity and focuses attention on the critical success factors required to fulfil the vision.
Stage 3 – Develop
We now move into a more detailed planning phase to develop a comprehensive understanding of the range of systemic changes that would be required to effect the desired change. This period of due diligence considers implications from a legal, financial, technological, cultural, branding and communications perspective. Both entry and exit strategies need to be crystallised. Collectively, these plans enhance engagement and commitment to the vision.
The implementation team needs to:
- map out the transition plan
- ensure they engender commitment and buy-in from key stakeholders, and
- create a sense of urgency for change
Stage 4 – Deliver
This stage begins with effecting any changes to the entities, Directorships, shareholdings and/or banking facilities that need to be made to commence trading in the “new world”, as detailed in the transition plan. To elicit trust and faith throughout the “enlarged” team, securing some quick wins and tangible evidence of the benefits of the “new world order” help engender political and emotional support for the transformation.
Elevating performance in this way helps compensate for the potential growing pains and transition costs involved in the integration of two different organisational cultures and approaches to dong business. This is the time when both parties need to demonstrate their ability and commitment to delivering on their promises to each other to realise the fulfilment of their shared vision.
Free Mergers & Acquisitions Facilitator Checklist
Are you considering whether to merge your business with another one?
Or, are you considering acquiring a business and integrating it into your existing business?
Perhaps you’ve been charged with bringing two or more businesses together and it’s not clear whether it will be a merger or acquisition.
Maybe you are mid-way through a merger or acquisition and find yourself or others struggling to make sense of the process…
Leading a merger or acquisition can be overwhelming and it is understandable if you feel lost as to where to start. Whether it is the first time you have been asked to lead a project like this or not, unless you are an investment banker it’s not a path you are required to tread on a regular basis.
Our checklist has been created to help you understand the role of a Facilitator in leading a merger or acquisition.
It also caters to the needs of someone who is trying to choose an appropriate Facilitator. It will help orient you to the task at hand and assist you determine whether to consider enlisting professional assistance in successfully leading organisational transformation initiatives.
It is prudent to engage an independent, unbiased third party to help you objectively assess the business case.
Successfully navigating your way through the process by avoiding the common pitfalls demand courage. It involves pioneering new territory – which doesn’t need to be a lonely journey.
You can download nLIVEn’s “Mergers & Acquisitions – Facilitator Checklist” here.
You can download nLIVEn’s One Page Process “Merger, Acquisition & JV Framework” here.