To start out, let’s face it, in the strategy development realm we get up on shoulders of thought leaders like Drucker, Peters, Porter and Collins. Perhaps the world’s top business schools and leading consultancies apply frameworks which were incubated from the pioneering work of such innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the corporate turnaround industry’s bumper crop. This phenomenon is grounded inside the ironic reality that it is the turnaround professional that always mops the work in the failed strategist, often delving into the bailout of derailed M&A. As corporate performance experts, we now have learned that the whole process of developing strategy must are the cause of critical resource constraints-capital, talent and time; as well, implementing strategy have to take under consideration execution leadership, communication skills and slippage. Being excellent in a choice of is rare; being excellent in is seldom, if, attained. So, let’s discuss a turnaround expert’s look at proper M&A strategy and execution.
Inside our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, could be the pursuit of profitable growth and sustained competitive advantage. Strategic initiatives demand a deep idea of strengths, weaknesses, opportunities and threats, as well as the balance of power inside the company’s ecosystem. The company must segregate attributes that are either ripe for value creation or vulnerable to value destruction including distinctive core competencies, privileged assets, and special relationships, as well as areas susceptible to discontinuity. In those attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real-estate, networks and information.
Their potential essentially pivots on capabilities and opportunities which can be leveraged. But regaining competitive advantage by acquisitive repositioning can be a path potentially packed with mines and pitfalls. And, although acquiring an underperforming business with hidden assets and various varieties of strategic property can certainly transition a firm into to untapped markets and new profitability, it is best to avoid purchasing a problem. In the end, a poor clients are only a bad business. To commence an excellent strategic process, a business must set direction by crafting its vision and mission. As soon as the corporate identity and congruent goals are established the road could be paved as follows:
First, articulate growth aspirations and understand the foundation of competition
Second, assess the life-cycle stage and core competencies with the company (or the subsidiary/division regarding conglomerates)
Third, structure an organic assessment process that evaluates markets, products, channels, services, talent and financial wherewithal
Fourth, prioritize growth opportunities which range from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
Fifth, decide where to invest where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, possess a seasoned and proven team ready to integrate and realize the worth.
Regarding its M&A program, an organization must first observe that most inorganic initiatives don’t yield desired shareholders returns. Given this harsh reality, it is paramount to approach the task having a spirit of rigor.
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