Transformative M&A

We all know that M&A can transform a business overnight if the deal is done correctly. However, not every company knows how to pull off transformative deals successfully. In this article, Duncan Painter, CEO at Ascential Plc, talks about what a “transformative deal” means to their organization and how they achieve deal success. 

"The longer we look at businesses and the better we get to know them, the better the quality of M&A we do." - Duncan Painter

Transformational Deals

For Duncan, transformative deals are capability deals in their market of expertise. They are looking for high-quality capabilities that they can leverage better than the target company. The target doesn't have to be a big company; they believe that a series of small deals can be just as transformative.

They believe that a classic transformational deal, which can turn your company upside down in an instant, is too much of a risk and will rarely succeed in transforming your company into a more successful one. 

Deal Sourcing

When it comes to deal sourcing, they do extensive research and are very patient. On average, they look at companies for at least two years before they invest in them. They understand the emerging forces in their space and get in early before they reach their full potential. 

Aside from research and market mapping, their biggest research group is their existing customers. They talk to their customers regarding companies, products, services, etc., anything that has made a difference to their performance. 

Divestiture

A big part of transforming your business is through divestitures. This is one of the hardest decisions to make because it means you are now choosing not to operate in a particular market anymore. 

Even if the business is still profitable, when there is a slow down in growth, or the business is no longer part of the company's core strategy long term, they divest it. A key part of any potential divestiture is to find a better shareholder for the business long term.

Unlike other companies who are discreet about their divestitures, Duncan makes sure to communicate it with the entire business. He finds it effective to communicate honestly with people and educate them that even though they are no longer part of the organization's core strategy, they are not going to lose their job.

Conviction on the strategy

"The less you know it, the less disciplined you are, the more you don't follow the fundamentals, and the more you convince yourself that you want to do the deal, even though every warning signal is telling you not to." - Duncan Painter

Lastly, once you have set your strategy, stay on the course and commit.  Focus on the specific markets that you are already good at and don't try to be an expert across too many markets or ranges.

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This episode is sponsored by S&P Global Market Intelligence. Access the most up-to-date and accurate data on private companies in a single web-based platform so you can get all the resources you need to create a winning pitch.