Creating Successful Deal Outcomes Using Innovation

Almost over 50% of M&A deals fail. Why? Because it’s hard. It involves a lot of people, but most of the time, these people have day jobs and do not focus on the integration process. But there are certain ways that we can improve the success rate of our deals.  

Joining in the discussion is Christian Von Bogdandy, Practice Director at Slalom, as we explore and learn how to create successful M&A deal outcomes using innovation. 

“Every crack that you have in the foundation of your organization will blow wide open during integration..” - Christian Von Bogdandy 

Focus on Integration

‍If you don’t already know, integration is the hardest part of the entire M&A process. It is where you create the value or lose value in the company that you are buying. Companies should focus on the integration process’s employee experience because they can lose value if they bought a product but lose the brains that built the product. This is something that any buyer should consider when they are integrating a business.

During integration, there are also a lot of cornerstone decisions to be made. Should you end-of-life the product or not, pricing structures, should you close a facility or not, are you going to use the brand or not? These are the types of questions that integration teams are usually stuck on. Leadership needs to make decisions promptly to avoid friction with the integration team. 

‍Be Agile

An Agile approach is also an excellent way to improve your M&A success. However, if you don’t have the proper governance process, your agile working teams are pointless. Your governance should enable an agile working environment. 

Agile governance is a type of governance focused on the team’s working environment, not on the progress. They care more about synergy realization rather than progress reports. 

Playbooks are a great way to retain knowledge from previous deals. If you do one or two deals a year, you would want to remember what worked and what didn’t. It’s like a knowledge management tool that you need to have.

Learn from every deal

Having a pre-mortem on every deal is a great way to keep people focused. While most people envision success during the early stages of a deal, flipping it over can be quite beneficial. It is a very good thought exercise around the risk and the sense of urgency around the deal. Assume that the deal has already failed, and work your way backward to determine potential risks that can cause the failure. 

Furthermore, post-mortems are good for identifying things that you could have done better in the deal and treating every deal as a learning experience.

Lastly, retrospectives in the middle of the deal are also a must. Have retrospectives with the target company to be able to identify cultural incompatibilities. They don’t have to have the same cultures, but it is important to identify them and mitigate them before getting too big that none of the parties are comfortable working with the other culture. 

‍Conclusion

A one size fits all approach does not apply to M&A. You need to focus on integration, be agile, and learn from every deal to keep improving your M&A process.