75% Of Mergers & Acquisitions Are Failures

How To Avoid  

What’s the point? The Problem of M&As

Most M&As fail, by 50%, 65%, 73.374%….. Lack of long term integration management (loses momentum) Post deal communication not handled well Soft issues neglected: culture, problems of retaining key personnel and cross state M&As clashes as a result of pay conditions, pensions, etc. “People forget that after the heady aspirations of Friday’s

deal team there’s work to be done come Monday morning.”

Stimulate your thinking about the issues Demonstrate how brand based transformation can drive top line growth & internal integration Explore possibilities to ensure M&A success Illustrate how the strengths of DCA helps you

Purpose of Discussion Guide Successful M&As

There Are No ‘Mergers’ Of Equals The obvious truth

Management’s in a hurry to grow Complete integration is necessary to: Cut costs Combine back office systems Release synergies Merge sales forces Blend product lines, etc.  

Culture & Practice Will Dominate!

“Merging and acquiring companies destroys shareholder value. It is as simple as that.”

Mark Sirower, Former Chairman, Goldman Sachs

Two determinates of value creation

1. How tight the ship is run

Typically the successful ‘acquirer’ are those with a history of cost control and productivity, i.e., the ‘acquirers’ culture will be the more successful in directing and getting the most out of the deal.

Two determinates of value creation

2. The closeness of relationships

In M&A, soft is hard and the closeness of relationships with customers, suppliers, partners is crucial. For the business that has the deepest rules the challenge is to embed the benefits of their knowledge and approach. *Brand architecture plays a huge role here. Is it logos, labels and lawyers or worlds shared by employees and customers?

Reasons for Failure Internal

Tough keeping business performing whilst managing the acquisition Not addressing victor & vanquished attitudes Loss of momentum Leadership struggles (diverting/devisive) Inability of managers to lead the people through the transition

Reasons for Failure Internal

Do as I say, not as I do - lack of role models Internal opposition to new ways of working Resistance to new structure Not engaging the workforce, fear of job losses Not addressing conflict and culture issues

Reasons for Failure External

Market share does not grow Confused brand identity Publicised promise is difficult to match on the inside Regulators (can) both hinder and help process Existing customers/suppliers no longer remain loyal Shareholders doubt acquisition strategy

Reasons for Failure External

How do you manage the absorption of the acquired brand(s) with its own values – operationally and culturally into one ‘family’?….or not? If so, how should you manage it? How do you absorb the acquired business/ brand into your house style? If so, how should you manage it?

Reasons for Failure External

Do you permit the business to keep its name under a new holding company ‘group’ concept? Do you manage the M&A as a transitional process, with an initial focus on product marketing and brand rationalization? Do you communicate other dimensions to the added value of the deal beyond simply increasing size, scope and resources?

A Profitable Capital Mgmt Program External

Be clear about the future and create a sense of direction and brand it Do not be afraid to state that you do not have all the answers Manage external and internal communication together

A Profitable Capital Mgmt Program External

Have a communication (and integration) plan in place before signing the deal, which includes: Audiences (including unions and work councils) Key messages Timetable Activities and materials Approvals process Responsibilities

A Profitable Capital Mgmt Program Internal

Do not over reassure internal audiences by saying there will not be significant changes Ensure regular and frequent communication using both face to face methods (for effectiveness) and digital methods (for timeliness) Focus on survivors not on leavers

A Profitable Capital Mgmt Program Internal

Do not pretend it’s business as usual Explain the business rational for the transaction (and repeat) Do not approach integration as a phase, but as an on-going process

A Profitable Capital Mgmt Program Concentrate focus on taking the initial steps

Planning Announcements and pre completion Early post completion Integration Transformation

Transformation does not occur simply through somebody in a suit standing up announcing it. There must be a vision. Moreover, it has to amount to more than a few

well chosen words.

Check List A Profitable Capital Management Program

Key messages - internal and external External consultants - who, why and what Interim communication branding Integration tools Contact program between management

Check List A Profitable Capital Management Program

Integration of communication terms Identify new vision, mission and culture Plan identity and communication strategy

Check List A Profitable Capital Management Program

Reporting news - internally and externally Communication needs for transformation Process for feedback

75% Of Mergers & Acquisitions Are Failures

How To Avoid