Mergers and Acquisitions
PremiValor Consulting has been involved in several mergers and acquisitions (M&A) processes, either through selling mandates or through acquisition mandates.
Different forms of synergies
Growth / Diversification
Why do M&As Fail?
Limited involvement of the owner
Incorrect valuation of the transaction
Faults in the integration process
Differences between business cultures
Lack of resources needed for integration
High recovery costs
Mistakes in negotiation
Lack of contingency plan
Why do M&As Fail?
Studies conducted on the outcome of M&As show that 30% of them fail within three years
The Importance of business culture compatibility
Culture consists of the long-standing, largely implicit shared values, beliefs, and assumptions that influence behavior, attitudes, and meaning in a company (or society).
Culture affects various corporate aspects such as:
Consensus vs top-down
Dictatorial vs consultative
Ability to change
Willingness to risk new things vs maintaining current state
How people work together
Formal structure and role definition vs informal relationships
Beliefs regarding personal success
Focus on individual performance vs focus on teamwork
The due diligence process
During the due diligence process the focus is usually on measurable metrics, such as financial data and legal questions. Only after the transaction is completed is the management team concerned with cultural compatibility.
Most managerial teams address this problem by defining a set of desirable cultural attributes and then encourage employees to adopt these attributes in their daily tasks. However that comes with the time pressure to deliver results to shareholders.
This pressure for results does not afford the time for a detailed cultural diagnosis or a long-term culture change project with uncertain prospects of achieving the desired goals.
This can be tackled by a more balanced approach, identifying the high-risk points and working with employees to mitigate the impact of these points.
There are several strategies to put this approach in practice:
Make sure that culture a major component of the new management’s plan
Consider the strengths of both existing cultures, not just the weaknesses
Identify who is responsible for corporate culture and have them report to senior management
Implement a decision-making process that is not affected by cultural differences
Ensure that the cultural work focuses on tangible and measurable components
Build an employee brand with a view toward how it will be understood by employees
Put people with knowledge and experience in culture change on teams that define the key strategies in the new organizational model
Premivalor M&A experience
We have extensive experience in the selling process of companies and businesses, supported by a senior team that facilitates trust between parties and the identification of the right buyer.
Buy side advisory
We help clients address the most important strategic decisions when it comes to buying a company or business ensuring sound growth strategies, including the financing operation. Our senior experts take you smoothly through the full scope negotiation and decision process, leading the planning, execution and deal-close of the transaction.