To begin, after all, inside the strategy development realm we get up on the shoulders of thought leaders for example Drucker, Peters, Porter and Collins. Perhaps the world’s top business schools and leading consultancies apply frameworks that have been incubated from the pioneering work of the innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the organization turnaround industry’s bumper crop. This phenomenon is grounded within the ironic reality that it is the turnaround professional that frequently mops up the work of the failed strategist, often delving into the bailout of derailed M&A. As corporate performance experts, we’ve discovered that the operation of developing strategy must be the cause of critical resource constraints-capital, talent and time; as well, implementing strategy need to take into consideration execution leadership, communication skills and slippage. Being excellent in either is rare; being excellent in the is seldom, when, attained. So, let’s talk about a turnaround expert’s look at proper M&A strategy and execution.
Within our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, could be the search for profitable growth and sustained competitive advantage. Strategic initiatives require a deep understanding of strengths, weaknesses, opportunities and threats, and also the balance of power from the company’s ecosystem. The organization must segregate attributes that are either ripe for value creation or vulnerable to value destruction for example distinctive core competencies, privileged assets, and special relationships, along with areas at risk of discontinuity. In those 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 capabilities and opportunities that could 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 various varieties of strategic real estate property definitely transition a business into to untapped markets and new profitability, it’s best to avoid investing in a problem. In fact, a bad business is merely a bad business. To commence an excellent strategic process, a company must set direction by crafting its vision and mission. Once the corporate identity and congruent goals have established yourself the path could be paved the subsequent:
First, articulate growth aspirations and understand the foundation of competition
Second, appraise the life-cycle stage and core competencies of the company (or even the subsidiary/division when it comes to conglomerates)
Third, structure a natural assessment procedure that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities including organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where you can invest 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 willing to integrate and realize the worthiness.
Regarding its M&A program, an organization must first notice that most inorganic initiatives tend not to yield desired shareholders returns. With all this harsh reality, it’s paramount to approach the task which has a spirit of rigor.
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