Strategy execution is one of the most fundamental reasons behind M&A. Acquiring a business and rationalizing the deal afterwards is a quick way to waste time and money.
This article will discuss creating an Agile M&A strategy featuring Daniel Gittsovich, Vice President, Corporate Strategy & Development at L3Harris Technologies.
"The only way M&A works is if you execute a strategy for why you did that deal in the first place." - Daniel Gittsovich
There will never be a perfect target in this fast-paced world where everything is constantly changing. An Agile M&A strategy helps M&A professionals execute deals more frequently, while driving growth and creating value for the companies.
An Agile strategy constantly evolves in response to market changes. Evaluate a company's strengths and identify target companies that will fill the gaps. A large part of M&A is evaluating opportunities and identifying what fits into a company's overall strategy.
When managing the pipeline, prioritize based on the following:
On top of everything, the overall corporate strategy should also change and evolve.
Business leaders are paramount to the success of every acquisition. While looking at different targets and markets, business leaders are the ones who are going to inherit the business post-close. Business leaders need to know if they can run the business, and if it fits within their strategy. Business leaders are also the best people to evaluate target companies.
However, business leaders have day jobs and can't be too distracted. Leverage their business and customer knowledge when building the pipeline, but as soon as something looks actionable, involving them is a must. Leadership buy-in is one of the most crucial parts of any acquisition.
The integration plan will inform companies about the potential worth of the acquisition, which is why integration planning must start early on in the process. The level of planning varies as the deal progresses, but the integration plan will ultimately dictate how the business should be run and the integration cost.
Merging certain functions during integration, as opposed to picking one over the other, is only an option if the target operates similarly to the business leader's existing business. If the target is extremely different in most functions, consider letting certain product lines run separately to maintain their value and specialty.