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Acquisitions are not the only way companies can achieve growth. Partnerships are a great way for organizations to grow their organic growth capabilities. This article will discuss strategic alternatives to M&A featuring Yvanna Perez-Morel, Sr. Director of Corporate Development at Ulta Beauty | Managing Director at Prisma Ventures.
"There must be a joint effort to shape the partnership over time to ensure it's a win-win for both sides." - Yvanna Perez-Morel
Strategy to partnerships
Similar to acquisitions, partnerships must align with a company's strategic priorities in order to be successful. Additionally, partnerships can serve as a test run for potential future acquisitions. The decision to acquire is typically made by business leaders who have established relationships with the target company.
Approaching target companies
There is no standard approach when it comes to approaching targeting companies. No two targets are the same, and every company has different cultures and challenges. However, Yvanna and her team have a go-to guide for how to approach a company.
- The target is linked to the company's strategic priority.
- Research shows that the target company must be a strong player in their space.
- The initial approach must not focus on partnerships but rather an interest in learning more about the company and building relationships that will ultimately determine cultural fit.
- There must be a joint effort to shape the partnership over time to ensure it's a win-win for both sides.
The process to partnerships
The process of forming a partnership is similar to M&A, but there are some key differences.
- Diligence - Don't look at the target's financials, but at the details of how the partnership will work.
- Final Contract - Contains the governance of the partnership. Both sides must approve the terms set by the business teams.
Success Metrics - There is always a set of KPIs to measure success. If both sides benefit from the partnership, they will hit and exceed the KPIs.