M&A Strategy and Execution Best Practices

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Business People Standing On A Symbol Of RecyclingFountainBlue’s Dec 11 Pre-Launch event for the VIP roundtable series was on the M&A Strategy and Execution Best Practices! We are grateful for the leaders and companies represented around the table, for sharing their wisdom and experience so graciously and generously. Please also join us in thanking our gracious hosts at Altera, who made our pre-launch event possible, and who had the original idea for the series. Below is a list of best practices around strategy and execution when managing an M&A event.

Strategy Best Practices:

  • Find a synergistic and/or complimentary offering, one that provides an expansion opportunity into new markets that are growing, and fills a gap in your technology direction and abilities.
  • Focus on the purpose of the acquisition – is it for the IT, for the talent, for the market share, while planning and executing on the M&A event.
  • Factor in whether there will be a leadership and cultural synergy between the two entities. Sometimes companies get so excited about the tech and market acquisition up-sides that they dismiss the cultural and leadership mis-matches which could make an integration difficult at best.
  • Look not just on whether the technology is the right match, but whether the team being acquired will also have the talent to market and sell that technology and product. Don’t just assume that the acquiring company will take over that piece.
  • Consider collaboration and defensive objectives in M&As, buying the leaders in a competitive landscape market​.
  • With that said, even if it makes sense to buy the market leader in a market which is being consolidated, make sure that the major customers would back the acquisition or they might make it difficult and even impossible to complete the M&A process.
  • Look beyond the factors that drive your decision for today, and look at what’s best for the company in the 2-3-year timeframe.
  • ​Consider whether the longer term benefit worth the short term integration cost and pain and whether the revenue model be bigger and better now and 2-3 years from now.
  • When there are competitive bids for a company to be acquired, consider not just the dollar value offered, but also how much independence is likely valued by the company to be acquired.
  • Larger companies can consider the option of being bought out by smaller companies in the same space, if they have the revenues to buy them, and if the leadership has the humility, strength and character to ensure the integration. Success for both sides means that the larger brand lives on and the smaller company provides the financial and leadership strength to expand.

Execution Best Practices:

  • Decide on common definitions for terms like ‘revenues’, ‘market’, ‘opportunity’, ‘partner’, ‘results’ etc.,
  • Whether you’re the acquiring or the acquired company, make sure that you have all the information and the right information throughout the due diligence process.
  • Have realistic objectives based on the information you have and agree on how success will be measured.
  • When a decision is made to start the M&A integration process, have enthusiasm and be optimistic, but don’t wear blinders. Pay attention to any red flags you might see and be curious about why they are there and whether there are more.
  • Proactively manage the brand strategy for both the acquiring company and the acquired company. How will the brand be improved and enhanced post-acquisition? What is the consistent communication and message about the M&A? Communicating in words and actions in alignment with the M&A objectives is critical to the success of any integration.
  • Leaders must manage their own emotions and help their people to manage theirs throughout the M&A planning and integration process. Ongoing transparent and open communication and alignment of words and actions will help ensure successful integrations. Keep the communications consistent and positive and insist that people communicate with respect.
  • Insist on making decisions when they MUST be made quickly​, selecting the best of all options, based on objective criteria which focuses on the M&A objectives, rather than deferring discussions, conversations and decisions.
  • Adopt a balance of structure and agility throughout the integration process. Have a plan, but be willing to drift from it as each integration is different.
  • Adopt a ‘Shut-Up and Eat’ principle as it helps people from both companies adopt a disagree-and-commit mentality and unity that helps moves things forward and discourages politicking and second-guessing, even when a unpopular decision has been made or when factions are divided on a decision that has been made.

The collective predictions for M&As include:

  • A continued consolidation of companies, particularly in the semiconductor space. It’s a ‘eat-or-be-eaten’ mindset right now.
  • China will play a role in semiconductor industry as it has billions to spend and is prospecting. Integrations with Chinese government or companies may be difficult because of cultural differences.
  • The digitization trend will continue to disrupt companies and industries, particularly industries which are not traditionally in tech! This poses new opportunities and challenges for acquiring and acquired companies.
  • Larger companies will have more spin-outs to support their innovation efforts in specific areas. Entrepreneurial teams can be more agile with their innovation, and can be more easily integrated back into the company once the technologies have been developed and the company’s brand and channel become more important.
  • Larger companies will have more splitting between business units and technologies as market opportunities and tech evolution favors that the entities divide up again. This is frustrating to many as these entities were purposefully integrated in the first place, so leaders must manage communication and motivate all players involved in order for the split to be successful, retaining technology and talent.

In the end, the secret to successful integrations is to have a future-perfect vision of the combined company, and to ensure that the technology is robust and scalable, the processes support the people and technology, and that the people and culture are in alignment to address an opportunity in a growing market.  

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