If you are a business leader seeking that extra competitive edge in a global market, stronger capitalization, or significant customer acquisition to grow your company, you may be considering a merger or acquisition (M&A). Just last year alone (2016), 800 M&A transactions worth SGD$125 billion were recorded in Singapore .
Express clear goals and expectations
If you are in a growth mode and your goal is faster growth, be mindful that seeking to be a partner in an M&A may be premature. Due diligence is a critical part of the entire assessment and decision process.
- "Growth" is not specific; bigger isn't always better . Define what you expect to gain from a merger or acquisition.
- As part of your goal-setting, be clear about the expectations you have for the M&A. Executives of SMEs in particular, who seek to merge with a larger organisation, benefit by working out in detail, ahead of contract signing, what management support, capital, and other resources will be available.
Speaking of expectations, aligning time frames will go a long way toward avoiding frustration. Your smaller organisation may be used to quicker business moves than a company with a larger
Skill retention risks
Perhaps your organisation requires special
- On the other hand, note the risks involved: if the M&A communications and contracts are mishandled, employees may exit the com-
panywhen they learn about the newly formed company.
- Expectations about retaining talent are key to a successful M&A - including when the goal is financial or customer gains. Why? Estimates for any gains to be made by either partner generally include an analysis of the current level of production, current profits, and current customers, all of which occurred with the current team of employees. Change that team and the rest of the assets may change as well.
Our recent article on "Strategic Shifting for Success: Talent Management for SMEs" outlines best practice communication strategies to ensure that your talent remains loyal and motivated. It is critical to ensure you have a strong human capital strategy to prevent any disruption to current client commitments, and very importantly, to be able to identify and retain key employees. The HR team or Consul
Adjust your focus to what you give (not what you will get)
For the M&A to succeed, you need to offer the potential partner company an ingredient currently absent for the partner to achieve a competitive edge. An acquirer can improve its target's competitiveness in four ways: by being a smarter provider of growth capital; by providing better managerial oversight; by transferring valuable skills; and by sharing valuable capabilities . Offering one or more of those ingredients will result in a win-win M&A in which both parties come out ahead.
A final caution
Many M&As fail each year - in fact, as many as 70 to 90
Look out for our upcoming article: "The Importance of Cultural Intelligence for Successful M&A"!