Maximizing the value of mergers and acquisitions

Maximizing the value of mergers and acquisitions

Disney and 21st Century Fox. CVS Health and Aetna. Walmart and Flipkart. Loblaw and Shoppers.

In business today, the biggest headlines involve mergers and acquisitions. M&A has become the ultimate growth strategy, the easy way to boost market share, acquire technologies, break into new categories, or intimidate or buy major competitors.

In the first half of 2018, M&A activity hit a record $2.5 trillion – a sign of corporate leaders’ faith in this strategy. But the fact remains that most mergers don’t deliver the anticipated value. In 2016, leading business academic Roger Martin observed that “70% to 90% of acquisitions are abysmal failures.” There’s nothing wrong with the concept of M&A. When two companies provide complementary product lines, distribution and growth opportunities, 1 + 1 can indeed equal 3. Unfortunately, it’s the awkward merging of cultures – the coming together of two companies with different histories, processes and trajectories – that often results in sub-par outcomes.

One inherent problem in M&A is the tendency of the acquired side to feel like they “lost” in the transaction. This feeling of victimization can turn top leaders into reluctant followers, eroding the culture of success that made the acquired organization a desirable target in the first place.

It doesn’t have to be this way. In my involvement with acquisitions in my career, I have seen teams come together to make sure both sides win. Ironically, the biggest opportunity often lies with the acquired team. If they can shed the mantle of “victim,” they can create new opportunities for growth amid the larger reorganization.

I call this: “Be the cause, not the effect.” If we can focus management teams on creating their own best future – not clinging to past glories – we can make mergers and acquisitions a more predictably successful process.

In my experience, organizations on the selling side can take three steps to maximize the benefits of a merger for both sides.

  1. Cast off the “victim” mindset. Leadership is about powerlessness and passivity. Change the attitude of the team from “But, we’ve always done business this way” to “Let’s get on board and accept the mandate of the acquirer” – for everybody’s sakes.
  2. As leader, actively seek to understand the acquirer’s motivation. Why did they buy the business? How do they wish to unlock its value? As the true experts in this business, how can we help them achieve – and even exceed – their expectations?
  3. Create a culture of change, not stability. An acquisition presents a rare
    opportunity for a management team to push for substantive change. Ask,
    “What activities can we change (or drop altogether) to strengthen our core
    competencies? How can we manage our own affairs so we can reinvest in our most crucial activities?”

Let me give you an actual example of how this process has played out.

In one case, I was heading up a division of a multinational organization that had just been bought by a third party. I decided the best way to serve both organizations would be to take charge of change – and make sure my organization started contributing quickly and productively.

As soon as the deal closed, I actively pressed my new superiors for answers. “Why did you buy this company? Where do you want to take it?” Sometimes our new leadership didn’t have the answers yet. But by initiating these tough conversations, I ensured we became part of that dialogue.

I advised my team that the management that bought our organization expected to see us reduce costs by a certain percentage. That’s how acquirers unlock value: through synergy and simplification. But it had been some time since our organization had rigorously reviewed its operations, so I challenged my team to double that amount. “Tweaking” operations might get us through the current crunch, but it wouldn’t create new thinking. The acquisition was giving us a once-in-a-generation opportunity to ask, “How would we run this business if we could start all over?”

Our team went to work with gusto. No longer victims, they unleashed their energy and creativity to take charge of our future. We inspected every business fundamental with an outsider’s eye. With the help of external consultants to guide our discussions, we asked, “What’s necessary, and what’s not? Where’s the value-add in every process?” We discovered new epiphanies and efficiencies, and sacrificed some parts to enhance the whole. Given a situation we couldn’t control, we created a meaningful initiative that demonstrated we were still winners.

In the end, our team was so successful creating new value that we were able to reinvest some of the proceeds back into our business. By acting instead of reacting, we were still determining our own destiny. We were cause, not effect. Over the following year, as the two corporate identities fused into one, our people retained their pride and their faith in the future.

If your organization is wrestling with change initiatives, or anticipating an M&A event, remember that optimists accomplish more than pessimists. Focus your people on the bigger, positive picture. Help them win. There’s an old nautical saying: “I cannot control the wind, but I can adjust my sails.”

Saquib would be happy to meet with you to discuss how your organization can benefit from “Cause, Not Effect” leadership. Give him a call at 647-338-5762. Or email him at

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Will We Ever Learn?

In today’s fast-changing world, we tell ourselves that learning is the most important skill anyone can develop.

Why, then, don’t more organizations encourage their employees to embrace continuous learning?

We’re living in an era of disruption. Yesterday’s print co-ordinator is today’s SEO expert. Bank tellers are financial consultants. Executive assistants are now project managers. And who knows what new skills and outlooks we’ll have to learn next!

Most companies now know they have to change, quickly and constantly, to adapt to new opportunities, technologies and consumer behaviors. But the people who will actually transform these organizations, from the front lines to the executive suite, aren’t getting the tools they need to embrace and lead effective change.

Yes, I’m biased. I’ve spent 25 years helping organizations raise their people’s performance levels through strategic learning and development. I’ve seen companies evolve from offering rote, task-oriented training (with titles such as “Effective Customer Service,” or “Excel for Non-Accountants”) to creating whole libraries of self-guided content that focus not on tasks, but on professional habits and attitudes.

Most organizations, however, still see “learning” as “skills training.” And while they might insist it has always been a priority, “training” has usually been seen as a low-impact, reactive cost centre. So it comes as no surprise that most businesses lag when it comes to helping employees learn the new attitudes and perspectives they need to become agile, creative contributors in the changing digital workplace.

Today’s business world demands that employees, managers and executives all understand and embrace new tools, techniques and models for creating business success. Growing emphasis on innovation, time to market and error-free service requires that all staff know how to create ongoing, exceptional value for customers, and remedy problems on the fly. But you can’t pick this up in a “lunch and learn.” Organizations today have to make perpetual learning, at all levels, an ongoing priority.

We can’t afford to get this wrong any longer.

In 1990, MIT systems scientist Peter Senge wrote The Fifth Discipline, a book that explored businesses’ need to become “learning organizations.” His logic was flawless: As businesses become more complicated, management must move beyond skills training to personal mastery – a discipline that includes clarifying and deepening one’s personal vision, focusing one’s energies, and developing patience. Then, said Senge, business must go several levels deeper and focus on building shared vision, emphasizing team learning, and adopting systems thinking.

Unfortunately, few businesses mastered these new ways of tapping employees’ full creativity and engagement. Which explains in part why aggressive young companies such as Amazon, Google, Facebook and Tesla now have so many established industries on the run.

As more and more companies face the challenges of technological and market disruption, senior management has to try again. True leaders must take over the file for organizational learning. What’s the point of developing a bold new strategic plan if you don’t invest in the learning and the culture that will enable employees to carry it out?

At Icicle Learning, we work with C-suite executives to develop custom-learning solutions. Whether you are rebranding, striving for innovation and intrapreneurship, or gearing up for tough new global competition, we use applied learning to support your whole team with new tools and new ways of thinking, focused directly on your changing needs and strategies. This increases employees’ resilience and buy-in, making your transformation more solid, successful and enduring.

When companies embrace perpetual learning, anything is possible. You can turn on a dime, innovate, and delegate. You can explore new frontiers with confidence. The sky is the limit because you are constantly building and reinforcing alignment, resilience and trust.

In the weeks ahead, I will be writing more posts on this topic, giving examples of the transformations I have been involved with, and outlining the steps you can take to master business renewal. It starts with one idea: your employees are partners in change. They want to know what the next step is, and how they can help.

Don’t let them down.

Next month: The Challenge of Innovation: Why learning must become an essential part of corporate strategy.

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