Hero-Driven M&A vs. Well-Performed M&A
by Jack Prouty, Past President, M&A Leadership Council
In our Art of M&A® training programs, one of the number one challenges listed by attendees is securing resources for the M&A effort.
Specifically, there are not enough of them; they are untrained or unqualified; or they lack dedicated staff because MA&D is treated as a part-time job in addition to their normal job. Why does this continue to be such a major issue?
While there are a number of factors, too often the reason is because “good gets in the way of great.” From senior management’s perspective, the acquisition and integration went okay, if it was not a failure.
Unfortunately, the people in the trenches – those managing and executing the planning and execution of the acquisition/integration – know differently. They know that because of resource constraints they did not achieve the full value of the deal, that in some cases they actually saw value erosion, and that in any case it was overall sub-par performance. But by working 12 hours a day, six days a week and throwing tremendous sweat and energy at it, they avoided complete failure.
This is what I call a “hero-driven” M&A versus a well-performed M&A. It was the dedication and effort of those driving the integration effort that made it appear to senior management that the company did a good job on the M&A.
So management moves on to the next acquisition and then the next one after that without feeling the need to do anything differently. They don’t realize the importance of getting better or what it takes to do so:
- Dedicated M&A resources
- Qualified and trained staff
- The infrastructure to support the effort and the teams (playbook, tools, templates, structured processes, etc.)
Everything seems fine until they experience an acquisition failure – and they will.
When that occurs, senior management (who may have been largely uninvolved in understanding and supporting the integration work required) search for someone to blame and a non-participant to lead the next acquisition effort.
They may never understand or accept the fact that the seeds of failure may have occurred upstream, way before the actual integration phase: during acquisition strategy, target selection, internal readiness, or due diligence.
MA&D failures can be avoided and deal value achieved if senior management would commit to being great, rather than relying on their understaffed and overworked integration team to make the integration results okay or even good.
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