To start, let’s be honest, inside the strategy development realm we ascend to shoulders of thought leaders such as Drucker, Peters, Porter and Collins. Even world’s top business schools and leading consultancies apply frameworks which were incubated from the pioneering work of such innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the company turnaround industry’s bumper crop. This phenomenon is grounded from the ironic reality that it is the turnaround professional that often mops the work in the failed strategist, often delving into the bailout of derailed M&A. As corporate performance experts, we’ve learned that the operation of developing strategy must be the cause of critical resource constraints-capital, talent and time; concurrently, implementing strategy will need to take under consideration execution leadership, communication skills and slippage. Being excellent in both is rare; being excellent in the is seldom, when, attained. So, let’s talk about a turnaround expert’s view of proper M&A strategy and execution.
Within our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, may be the search for profitable growth and sustained competitive advantage. Strategic initiatives demand a deep understanding of strengths, weaknesses, opportunities and threats, and also the balance of power within the company’s ecosystem. The corporation must segregate attributes which are either ripe for value creation or susceptible to value destruction including distinctive core competencies, privileged assets, and special relationships, as well as areas susceptible to discontinuity. In those attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real estate property, networks and knowledge.
Send out potential essentially pivots for capabilities and opportunities that may be leveraged. But regaining competitive advantage by acquisitive repositioning can be a path potentially packed with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and other varieties of strategic real estate definitely transition a firm into to untapped markets and new profitability, it’s best to avoid purchasing a problem. All things considered, a bad customers are just a bad business. To commence a prosperous strategic process, an organization must set direction by crafting its vision and mission. Once the corporate identity and congruent goals have established yourself the way could be paved the subsequent:
First, articulate growth aspirations and view the foundation competition
Second, look at the life-cycle stage and core competencies from the company (or perhaps the subsidiary/division in the matter of conglomerates)
Third, structure an organic assessment method that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities which range from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where to invest where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, possess a seasoned and proven team willing to integrate and realize the value.
Regarding its M&A program, a company must first recognize that most inorganic initiatives do not yield desired shareholders returns. Considering this harsh reality, it is paramount to approach the task having a spirit of rigor.
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