Growth strategies often involve acquisitions and alliances. Both provide rapid access to new customers, geographical markets and technologies. Both require extraordinary leadership for success. The magnitude of change is high while leaders getting access to the drivers of transformation is much harder.
Acquisitions and alliances both involve combination of two or more organizations with rich complex histories, management practices, mindsets, organizational cultures, processes and points of view. While this is obvious, often the initiators of the acquisitions and alliances know precious little about the other organizations. While experts pore over the financials and product offerings, often little attention is paid to the leadership, management practices, morale of the people and organizational cultures. The management mindset of “we could not find out much about them in due diligence” is the business analogy of buying a pig in a poke. This English idiom means buying something without knowing its true nature and value.
King Chapman believes post-acquisition integration and/or forming alliances requires extraordinary leadership and an organizational transformation project if the expected value is to be captured. We have experiences and methodologies from facilitating acquisitions and alliances on a global scale.
KingChapman believes achieving success in acquisitions is fundamentally about people. While acquisitions are often described in terms of fixed assets, future cash flow, brands, new geographies, expanded technology, etc. people are at the heart of what makes a given acquisition.
Based on research on successful acquisitions, KingChapman can guide the leadership and organizational assessment of potential acquisitions. We then can guide the integration processes, to assure success. Post-acquisition integration requires strong leadership, even though most of the executives are exhausted by the time the deal closes. When they want to go do something else is exactly the time the demands on their energy and time increases. Successful acquisitions also involve a second stage of integration which many companies do not know about, or ignore. This second step involves winning the hearts and minds of the people about the future of the combined organizations.
KingChapman facilitates forming of successful strategic alliances. We have also consulted on troubled alliances in many parts of the world. Based on our experiences, we find the following factors to be part of what is required for alliance success:
- The alliance is founded on commitment to results of the alliance, not the individual companies
- The set-up and beginning of the alliance is solid, with leadership clearly present
- Trust is established as a cornerstone, and yields a win-win relationship
- A new context is generated for the alliance based on intended future results, rather than adapting to the lead company
- Effective agreements and contracts serve to forward the alliance, rather than create a bureaucracy
- There is a project structure in place
- There are shared and common objectives for the alliance. The rewards and risks among the alliance partners are based on shared profit
- There is effective operational management in the alliance. Usually, it is a cross-company or integrated management team that manages the alliance toward shared and common objectives
- There is a well-understood process for dealing with breakdowns. Rather than being stopped by breakdowns, the alliance uses them to increase performance