1. IF IT AIN'T BROKE, DON'T FIX IT
M&As should not be an opportunistic impulse or a last-ditch solution. They should be part of a strategic plan, not an end in themselves. Always weigh them up against alternatives, such as organic growth.
2. GOING IN WITHOUT A STRATEGIC PLAN
M&As, like any other business pursuits, present risk. Risk offers the potential for high returns and should therefore not be eliminated, but must be managed well. Where and how you choose to deal will ultimately determine the outcome of the M&A. Outlining a strategic plan and its expectations early might save a lot of explaining at a later stage.
3. STICKING TO THE STRATEGIC PLAN
M&As are not an exact science; they're a craft and a work in progress for many months, sometimes years. No amount of planning will guarantee a glitch-free process. But adaptability, open-mindedness and a willingness to compromise will ensure that they don't turn into full-blown obstacles.
4. NOT LETTING GO
All M&As involve some degree of identity change. Letting go of previous preconceptions is essential to overcome cultural differences in the new entity, particularly in cross-border deals. It is then paramount to develop a new ambition, based on new premises. Beware of overplaying the equality card, though, as in the long term, it tends to be just as counterproductive as 'colonising' attitudes.
5. IT'S NOT ABOUT YOU
It's possibly one of the biggest flaws in many M&A processes. Debates over who will be CEO and who will be chairman have stalled more than one transaction. An M&A should be in the firm's interest. It's not a personal crusade, even if it can make or break a career.
6. PREDICTING GREAT THINGS
Sweeping statements about the profitability of M&As are unhelpful. Every deal is different, depending on the type of company, its size and maturity, the nature of the market and the timing of the operation. Besides, it is impossible to say what would have happened had the M&A not gone ahead. Compared with most business pursuits, an M&A represents a relatively good form of investment.
7. INTEGRATION FATIGUE
Most M&As tend to lose steam after the first few months. Top executives have other pressures to deal with and can lose interest. The key to keeping the momentum going is to ensure ownership of the transaction at all levels of the management chain. Everyone must feel involved.
8. GOING IT ALONE (PART ONE)
Getting everyone involved requires a tremendous amount of leadership capacity and excellent communication. The planning and execution phases may require a very small number of senior people, but implementation requires effort from the masses - and a great leader to take it through the process successfully. Generating buy-in from the rank and file is one of the keys to success.
9. GOING IT ALONE (PART TWO)
Many people will never come across an M&A in their career, and very often those who do will have to do it only once. Getting help from professional advisers is wise, particularly since most top executives will probably have many other issues to deal with. It may emerge a few months into the new entity that some people are not suited for their job any more. Don't hesitate to make changes, and to reach outside to get the right skills.
10. ONE-SIZE FITS ALL
Every M&A is different, and although it is possible to learn from other companies' mistakes, beware of spurious learning. Where a hard-and-fast integrated approach may be called for in one setting, it could be a mistake in another. It takes careful thinking to establish how value will be created and what the best approach might be.
2005 BEST-SELLING CASES ON M&A
Deals from hell: M&A lessons that rise above the ashes, Robert F Bruner, John Wiley & Sons, 2005
Maintaining momentum in mergers, European Business Forum Issue 4 (Winter 2000), Philippe Haspeslagh
Making M&A pay: lessons from the world's most successful acquirers, Strategy and Leadership, Vol 32 No 1, 2004, Ron Langford & Collin Brown III
Acquisition essentials: a step-by-step guide to smarter M&A deals, Denzil Rankine and Peter Howson, Prentice Hall, 2005
The transformation of BP, Reference 302-033-1, S Ghoshal, L Gratton, M Rogan, London Business School, 2002
Nestle-Rowntree, IMD-3-0423-25, J Ellert, J Killing, D Hyde, International Institute for Management Development, 1989
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