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The Importance of a Mergers & Acquisitions Strategic Plan – 3 Tips!

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The Point: The thought of acquiring another company can be a very seductive strategic plan when CEOs wish to improve corporate performance and overall growth. Companies spend a huge amount of money every year on acquisitions – yet studies have confirmed that the rate of failure among mergers & acquisitions is at an all time high (peak!). What exactly are the causes of these failures (and more importantly successes)? In this post, we’ll discuss the importance of a Mergers & Acquisitions Strategic Plan and provide 3 Tips… Enjoy!

The Importance of a Mergers & Acquisitions Strategic Plan – 3 Tips!

What Leadership Does Wrong?

A large number of acquisitions miss the mark in regards to expectations since organizational leadership mistakenly attempts to coordinate candidates with the strategic aim behind the arrangement, neglecting to recognize bargains that may enhance current operations and those that could drastically change growth prospects of the company. These often make organizations pay the wrong price (i.e., overvalued) and integrate the acquisition wrongly.

There are two motivations behind acquiring a company, which most executives frequently befuddle. The first, and the most widely recognized one, is to increase your organization’s present performance – That is, to hold a superior position, while cutting expenses. The second, and less-known reason for acquiring a company, is to re-evaluate the mode of business operations through expense reduction – This is most likely to confound investors with spectacular pay off (especially when labor costs are slashed).

Integration often determines whether the acquisition will succeed or fail. You should be able to describe exactly what you are buying to foresee the way integration will play out.

One powerful way forecast effectively is to view the established targets/goals in its business model. Additionally, value is created and delivered through 4 interdependent elements of a business model:

– The customer value proposition is the first element

– The profit formula

– Available resources (such as technology, employees and cash)

– Lastly processes (including budget, R&D, manufacturing, and sales)

Three Tips of Having a Good Mergers & Acquisition Strategic Plan

Tip #1: Helps in Acquiring Resources That Command Premium Prices

Having plans to improve a new product or service is no guarantee to command a price premium. Buying improved components (compatible with their products) is a strategy that is routinely done by some companies to command premium prices.

Tip #2: It Helps to Lower Company Costs

Leadership often promise that an acquisition will lower costs, where in reality, it’s only possible in few scenarios, such as, and acquiring company with high fixed costs can expect higher profit potential. Most deals succeed using almost the same strategy.

The parent plugs some particular assets from the procurement into its current model, ejecting whatever is left of the acquired model and closing down, laying-off or offering redundant assets for sale. The execution help comes about because of utilizing the objective’s assets such that scale financial matters can drive down expenses. The strategic use of resources from the target will help in boosting performance and drive down costs 

Tip #3: A Disruptive Business Model can be Acquired

Disruptive business models and products have been proven to be the most reliable sources of massive growth in both margins and revenues. Disruptive companies typically offer simpler and more affordable products than what bigger players offer. Their footholds are well secured in the low-end of a market and gradually step up to products with higher margin and performance.

SUMMARY

In Mergers & Acquisitions, we all believe that success will be the end result. However, wrong companies are being purchased daily for the erroneous motive, wrong elements are integrated into the wrong business models, and wrong measures of value used when pricing deals (This is a mess that shouldn’t be!) You must be able to predict accurately if a company under acquisition consideration is a great deal, or just a debacle in the waiting!

 

Sam Palazzolo

PS – If you or your organization are challenged as a result of M&A activity, please don’t hesitate to drop me a line and request future post titles! Here are a few of the other M&A titles previously published/in the works:

– Will Your M&A be a Success of Failure? (CLICK HERE)

– How to Successfully Survive Mergers & Acquisitions

– M&A: Creating Shareholder Value

– M&A: Should You Go For Stock or Cash?

What Role Does Technology Play in Turnaround Management?

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The Point: When a company is on the brink of financial havoc (or already facing financial havoc!), we tend to look for ways to turnaround the operation. Technology has been looked to as an answer to the financial havoc problem. The role technology plays in turnaround management has been a great one to explore (Keep in mind, there are other areas of a business to explore… But those are for a later blog post!). Companies can not only explore business technology, but now rely on it heavily whenever they identify a turnaround condition. Technology is filled with the means to improve the positive effects of your business strategy. In this blog post, you will get to know how technology has been able to be leveraged so as to help turnaround management, and why you should put it into consideration when you next face a turnaround opportunity… Enjoy!

What Role Does Technology Play in Turnaround Management?

Roles Technology Plays in Turnaround Management

ROLE #1: SURVEILLANCE – One of the reasons a company may be failing is the devoid of effort produced by members of the company. If your company happens to be failing because of this reason, and you finally detect that, it will still be difficult to make necessary amendments without business technology. However, with the help of technology, you can check out the efforts each member of your company is putting to work. This can be done at anytime, and it has even been made advance that you can check this out right from your home or even when you are outside the country. This can direct you in turnaround management and even in the designing of a new business strategy if needed.

For example, let’s explore the surveillance camera. If you do not have a surveillance camera in your company, you can do it at anytime and it is very easy to install. Surveillance camera has made it possible for business owners to detect a lot of unknown and obscure things that happen in the place of work when he or she is away. This is a major role technology plays in turnaround management.

ROLE #2: COMMUNICATION – Apart from the fact that surveillance can be very helpful in detecting useful information, there are also communication tools that can make the management of a company get to know information from both business members and outsiders. The internet has also been helpful in making anonymous individuals share reviews about the company (Think Yelp!, Google+, etc.) This can help business owners have insight of what the company is lacking, and more importantly what is needed to be done for an effective turnaround management. Business technology that enables communication between business owners and employees should be reviewed/mined for input in further modifications (Products/Services, Processes, and People). It is a shrewd business strategy to survey employees so as to get information from them, rather than approaching them personally, as they may not feel too comfortable divulging some information without fear of retribution.

SUMMARY

In this blog post we’ve explored the question “What Role Does Technology Play in Turnaround Management?” and provided 2 roles to assist turnaround management. Keep in mind, technology has gained wide acceptance by majority, and there is rarely a company that will say no to business technology adoption. What might be questioned is the timeline for installation.

 

Sam Palazzolo

PS – If you/your organization has challenges as a result of Turnaround Management activity, please don’t hesitate to drop me a line and request future post titles! Here are a few other titles that are currently in the works:

  • Why Companies Fail or Enter a Declining Period
  • The Stages of Corporate Turnaround
  • The Stages of People Turnaround Process

 

 

What Makes M&A so Difficult to Execute Successfully? Top 3 Reasons!

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The Point: Visualize a scenario where you buy a used car… There were test-drives available, you could examine both interior/exterior, even seek assistance from a trained mechanic to help assess the performance/stability of the car. Now, irrespective of all due diligence, the real fact is, whether you made a good purchase or otherwise, you will get real evidence after the purchase is made once you start riding around in it over time. Mergers &acquisition deals also have the same route and challenges – you can examine the existing business based on visible financial numbers, assumptions of potential fitness and advisory assistance from M&A advisors. With all these though, it’s only when all deals are made and the business needs to be moved forward that reality sets in – the dreaded difficulties and challenges may arise. In this post we’ll talk about what makes most mergers and acquisitions difficult to operate successfully… Enjoy!

What Makes M&A so Difficult to Execute Successfully?

Why Most Mergers & Acquisition Fail

Most people have read studies reporting the failure of most acquisitions to provide shareholder value – yet there have been an increasing M&A market with frothy valuations, not lacking willing buyers to venture.

A purchase with a high price often increases the task of creating a higher value. For the last decade, it has come to the understanding of many buyers that value is created from building real business value and NOT just from mere clever financial engineering and opportunistic buying.

Acquiring growth from new markets, customers and products are the major purpose for most mergers & acquisition – for profit maximization through the strategic potential of a deal. But are most firms really getting all of these? Statistics have confirmed it not to be the case. Discussed below are the reasons why executing M&A successfully can be difficult.

Top 3 Reasons Why Successfully Executing M&A is so Difficult

Reason #1: Not Executing the Integration Process

The post-merger integration has been a major challenge for many mergers & acquisitions deals. In order to identify crucial projects or products, key employees and all sensitive matters, there must be a well structured appraisal process in place. With this in place, there should also be a design for efficient integration/adoption of processes that will be supported with automation, consulting and possible outsourcing alternatives (so as to avoid deal complexity).

Reason #2: When Owners are NOT Involved

Most of the time, a limited role is assigned to advisors until a deal is completed. With this being made known, newly acquired entities are onus of their owners (or without). There should be involvement from owners starting from the establishment of the deal, to how the business will run and should allow advisors to play a role assisting (if need be). This will have a lifelong benefit to the organization as the owner will benefit from the experience of gaining tremendous key knowledge/insight and the all too important ability to execute.

Reason #3: Assuming Optimism Blindly

It is very common for buyers to assume that a targeted company operates just as the way they do things themselves. It must be noted that there are a lot of different approaches of operational functions by which companies operate by. The integration team should account for these differences when plans are being made. They should consciously make the right assumptions rather than aggressive ones.

We’ve worked with a large client for several years now… While each has the same corporate logo hanging out in front of their business, each operates dramatically different from one another on the inside!

SUMMARY

In this post we’ve discussed the topic of mergers & acquisition, and more indepth what makes M&A so difficult to execute successfully. From an outsiders seat there appears to be a need to enhance deal-making skills for acquiring a new business if lasting success is desired. A potential great company will learn from the three reasons given of mistakes made by rookies and improve, integrate the right process where owners will be involved, and consistently build capabilities needed for future growth.

 

Sam Palazzolo

PS – If you/your organization has challenges as a result of Mergers and Acquisition activity, please don’t hesitate to drop me a line and request future post titles! Here are a few other titles that are currently in the works:

  • Will Your M&A be a Success or Failure? 3 Tips!
  • Disrupting Your Industry with Exponential Growth: How Amazon’s Purchase of Whole Foods Upended Retailer’s Strategic Plan
  • Mergers & Acquisition: Should You Go for Stock or Cash?
  • The Importance of an M&A Strategic Plan
  • Mergers & Acquisition: Creating Shareholder Value
  • Mergers & Acquisition – Six Diversification Questions
  • Mergers & Acquisitions: The Future in the Old/New Economy
  • How to Successfully Survive Mergers & Acquisition
  • Mergers & Acquisitions: The Problem with Acquisitions

 

Is the Art of Business Development Prospecting Overrated? 3 Tips!

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Many sales guru’s think that the Art of Business Development Prospecting is overrated, but this aspect of business can never be sidelined. Many make blunders because they mistake the art for “something else” by committing one or more of the under listed blunders:

  1. Not listening. No salesperson has ever heard of a sale. However, when asked a simple question, many sellers take it as a license to deliver a monologue. Here are three tips for better listening.
  2. Using sales of snapshots. People often start to lose interest when they feel they are being sold. Usually they begin to feel this way when they hear phrases like “This is a great question” or “What is needed to get your business today?” People need to feel like individuals, not like parts on an assembly line.
  3. Failure to adapt to the situation. The problem with using a rigid sales script is that it assumes buying motivations, prospects pain points, and supposed similar situations in life.
  4. Distinguish features from benefits. Often focus on sellers telling someone what a product or service to the detriment of this problem solves or what pain takes away. Once I observed a commercial leasing agent from the prospective client’s office. When he met in the hall of the building, he commented on the large outdoor car park. It was a declaration of characteristics. A benefit statement would have focused on how customers would never find a parking lot or that people could always park near the building in bad weather. Was it a necessary conversation point to make? Probably not!

Below are three tips that can assist in the art of business development prospecting, taking you from overrated to actual sales/business development activity:

Tip #3 – Prospecting is Not Networking.

Prospecting requires thoughtful analysis. Networking is improvisational and immediate. Prospecting requires equal measure of looking out into the marketplace assessing the need or demand, and introspection to look within yourself and determine, with clarity and confidence, what opportunities you are well positioned to pursue that will elevate your scene to ever-higher levels.

Prospecting requires discernment. It’s not a numbers game all the time. Whatever your business, you will not be good for all potential prospects. There should be a mutually perceived adjustment between you and your prospective client – where the best to serve them well is in a way that is highly valued by them (NOT you the salesperson!) Believe me, this dilutes the pile of pressed mud. Once you are able to define what a “good fit” is for the prospect, and why they should care, you are able to focus all your energy and resources on the opportunities that feed the most promising of prospects. When you are highly specialized, prospecting is often though of as “easy.” If you are a specialized expert, known in the market to solve specialized types of problems you may be thinking that you do not need to prospect for customers (or those customers who need this kind of problem solved). It is much easier to determine which prospects place a high value on your solution. Chances are good that these prospective clients will be looking for you too, and you will be much easier to find as a result.

Tip #2 – What Defines a Perspective?

A prospect is a known buyer at an early stage in search of a solution to a major problem that cannot be solved now or in the near future. All the others are suspect. Converting suspects into prospects is a tough job and takes time. In my consulting firm, it takes three months or more of careful “in-touch” strategies to transform a prospect from a suspect.

Tip #1 – Always Be Prospecting (ABP)!

Prospecting is not an activity you do when you need business. If you need business next week, the prospecting of evil cannot correct. Always be prospecting (ABP), no matter how busy you are. It is the only way to create a sustainable sales pipeline to grow your business. Whatever your current business book, plant and tend a garden for abundant future prospects ripening every day.

SUMMARY

In this post we’ve set out to identify is the art of business development prospecting overrated, along with three tips to assist you in implementing the prospecting pipeline-fill needed to be successful in sales.

 

Sam Palazzolo

PS – If you or your organization is challenged as a result of Sales / Business Development activity, please don’t hesitate to drop me a line and request future post titles! Here are a few other titles that are currently in the works:

  • Rеѕроndіng tо Emergencies
  • Identifying thе Strеngthѕ and Weaknesses in Representatives
  • Dеvеlоріng Strаtеgіеѕ fоr Rеvеnuе Grоwth
  • Developing Effесtіvе Cоmреnѕаtіоn Pans
  • Hоldіng Sales Rерrеѕеntаtіvеѕ Accountable fоr Pооr Pеrfоrmаnсе
  • Learning tо Motivate and Inѕріrе Sales Representatives

The Leadership Challenge: Flexibility – 5 Tips!

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The Point: If you’ve ever taken in a Cirque du Soleil show you know that the pure athleticism of a cast member is simply mind-boggling. It bears repeating… Mind –boggling! Mix several of these cast members into the choreography of the show itself and it can be sensory overload (almost inducing a nauseous state!) In this post we’ll examine the leadership challenge of flexibility and provide 5 tips so that you as a leader can be more Cirque-like in your leadership pursuits… Enjoy!

The Leadership Challenge: Flexibility – 5 Tips!

I Have to Do What with My Phone?

Is there anything better than taking in a show in Las Vegas? In full transparency, I’m fortunate enough to call Las Vegas home and am 100% biased. I simply believe it’s the best city on Earth! After all, who has better entertainment, restaurants, and night-life than LV (I’ll recognize NYC, but…)? And nothing is better than going to see the Cirque du Soleil shows. From KA at MGM, Michael Jackson at Mandalay Bay, The Beatles at Mirage, “O” at Bellagio, the list goes on and on… Each of them fantastic in their own right.

As different as each of these shows are, there is a core athleticism that remains the constant benchmark. The cast members are not only in fantastic shape, but the choreography highlights just how fantastically athletic each one is. Another constant is a need for safety for each and every cast member. So with safety in mind, each show starts off with a “kind” way of informing the audience to please shut-off your cell phones (NOTE: Videos/Photos are forbidden!)

5 Tips for Leadership Flexibility

I recently took in the “O” show at Bellagio, and it did not disappoint! I was left mouth-opened (ironically in the shape of an “O”), gasping for explanation as to how the cast members were able to pull-off the many choreographed scenes that were performed. In a word, I was stumped!

So it’s with this show in mind that I began to ponder “What are the leadership lessons that can be learned from such an amazing production?” Here then are 5 tips for the leadership challenge of flexibility, Cirque-style:

Tip #5 – Sometimes It’s Going to Rain!

To say that the “O” Cirque show has water in it is like saying there is oxygen in the air… It’s everywhere! And just when you think you/the cast members are safe water presents itself again and again. So know this much as a leader, it is going to rain (or the elements are not going to cooperate). It’s not a matter of if, but when… So prepare yourself for the elements.

Tip #4 – You Better Be Flexible!

The Cirque cast members, as previously mentioned, are each gifted athletes, with strength and flexibility. So as a leader you had better be prepared to flex your muscles and be flexible when those unplanned business situations arise.

Tip #3 – Eliminate Noise (No Cell Phone Utilization!)

I previously discussed the cute way in which audience members were requested to quiet their phones. Likewise, as a leader sometimes you’ll be better off if you go and sit in a quiet conference room by yourself to actually think (and breath) about what you are going to do. Think of this as a strategy session for one!

Tip #2 – If You’re Scared, Say You’re Scared and Jump In!

The highlight of the “O” show for many is the high-divers that jump to what appears to be their peril, but in actuality land in a very wide/deep pool of water. I guess that old New Orleans phrase of “If you’re scared, say you’re scared” can come in handy for the leader that needs to get over whatever is presenting the obstacle-of-the-moment so that they can move on.

Tip #1 – Enjoy the Moment!

Nothing, and I mean nothing, gave me greater joy than to go see the “O” show with loved ones (I’ve actually seen it twice!) It was in this second viewing that I was able to take in more (See my sensory overload comments earlier) and really notice what was taking place all over the stage. As a leader, you’ll be pulled in a multitude of different directions in what appears to be simultaneous instances. When this occurs, and I know it will be difficult, you need to remember to smell the roses and enjoy the moment.

SUMMARY

In this post we’ve explored the leadership challenge of flexibility, brought to life through the magical Cirque du Soleil shows in Las Vegas. While you/I might never look like a Cirque performer (I’m still attempting to!), hopefully the five tips presented will provide you with some insight into how you can be the best leader you can be (Or at the very minimum, jump from a high-dive into a pool!)

 

Sam Palazzolo

 

PS – If you have a leadership challenge you’d like me to explore, please drop me a line and let me know!