It’s no secret that achieving a successful merger and acquisition (M&A) is challenging. Some failure rates are as high as 90 percent and more than 60 percent of M&As destroy shareholder value. Organizations can suffer from a lack of discipline when evaluating deals, fail in the strategy integration process, or find a base-line values and culture mismatch.
Credera recently completed a M&A deal with the acquisition of DMW Group (DMW). DMW is a London-based consulting firm specializing in design, delivery, and implementation of data and digital transformation programs with offices in London, Leeds, and Manchester. During the deal making process, we wanted to practice what we preach when it comes to M&A strategy. Throughout the process we prioritized deep research, high-level strategy, and kept the people and culture connection at the forefront.
Three Critical Questions to Consider with an M&A
Inc. recently published three critical questions to ask before planning an acquisition. Inc. contributor, Joel Comm, explains the value of establishing strategic fit from the beginning and highlights Credera’s M&A strategy as an example of a people- and culture-first approach.
1. How does this M&A fit into your enterprise strategy?
Organizations should focus on a solid enterprise strategy when assessing fit for their next M&A deal. “Expanding your company’s expertise, entering a new market, or capturing a segment of an audience that has eluded you,” are key goals to achieve with a merger or acquisitions, shares Comm.
The executive leadership team must have their fingers on the pulse of the M&A deal and the strategy behind it. Having a clear and detailed target profile that is in concert with the enterprise strategy will drive consistency and eliminate rework as the M&A team evaluates potential targets.
2. Are your company cultures in alignment?
Amazon’s acquisition of Whole Foods is a frightening reminder of an acquisition that seemed so promising but turned into a bitter culture war. Having a clear understanding of this difference could have saved that acquisition and many others a lot of pain.
“However, you can't rely solely on the values an organization espouses on its website to understand its culture,” Comm warns. “If possible, spend some time at the offices of the organization you're courting and observe day-to-day operations. For example, Credera, a management and technology consulting firm, followed a ‘people and culture first’ strategy during its most recent acquisition of London-based consultancy DMW Group and had employees from both companies meet and spend focused and intentional time together before making anything official.”
3. How will the move help both companies grow?
Walking into an M&A deal with a clear plan for how both companies will benefit can do wonders for culture integration and increasing shareholder value for the new entity.
Asking strategic questions about the future benefit to both organizations can help lay the foundation for success. Comm shares examples of questions as a starting point, “Does your company have the spending power to help an underdog grow? Does a potential merger unlock new markets that each of you needs to compete globally?”
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Finding the Right Fit
The right M&A deal can be difficult to come by. Keeping in mind these three critical questions can start you on the right path. Start with a clear M&A strategy that aligns with the enterprise’s strategy, keep culture at the center of the conversation, and find ways to help both companies grow. If you’re exploring your own M&A strategy and want to talk it through reach out to us at firstname.lastname@example.org.