To start out, let’s be honest, within the strategy development realm we get up on the shoulders of thought leaders such as Drucker, Peters, Porter and Collins. Perhaps the world’s top business schools and leading consultancies apply frameworks that were incubated through the pioneering work of the innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the company turnaround industry’s bumper crop. This phenomenon is grounded from the ironic reality that it is the turnaround professional that usually mops up the work of the failed strategist, often delving in to the bailout of derailed M&A. As corporate performance experts, we now have found that the operation of developing strategy must be the cause of critical resource constraints-capital, talent and time; simultaneously, implementing strategy need to take into mind execution leadership, communication skills and slippage. Being excellent in a choice of is rare; being excellent both in is seldom, if ever, attained. So, let’s discuss a turnaround expert’s view of proper M&A strategy and execution.
Within our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, may be the quest for profitable growth and sustained competitive advantage. Strategic initiatives need a deep understanding of strengths, weaknesses, opportunities and threats, plus 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, along with areas susceptible to discontinuity. Within these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real estate, networks and details.
Their potential essentially pivots on both capabilities and opportunities that could be leveraged. But regaining competitive advantage by acquisitive repositioning is really a path potentially full of mines and pitfalls. And, although acquiring an underperforming business with hidden assets as well as other varieties of strategic real estate property definitely transition a company into to untapped markets and new profitability, it’s best to avoid getting a problem. In the end, a poor clients are simply a bad business. To commence an effective strategic process, an organization must set direction by crafting its vision and mission. As soon as the corporate identity and congruent goals are in place the trail might be paved the next:
First, articulate growth aspirations and comprehend the first step toward competition
Second, appraise the life cycle stage and core competencies with the company (or subsidiary/division in the matter of conglomerates)
Third, structure an organic and natural assessment method 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 you should invest and where to divest
Sixth, develop an M&A program with objectives, frequency, size and timing of deals
Finally, have a seasoned and proven team able to integrate and realize the significance.
Regarding its M&A program, a company must first observe that most inorganic initiatives do not yield desired shareholders returns. Given this harsh reality, it’s paramount to approach the process which has a spirit of rigor.
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