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“Finding the Balance”

Mar 22, 2021 1:22:03 PM Neil Cornish Tech Data, Acquisition, M&A, Business Growth

This phrase has come up a few times recently, both from webinar speakers and during conversations within meetings. Perhaps it should be “finding the new balance” as we are all working differently to how we were 12 months ago.

 

It’s not just managing our time that needs to be balanced; between non-stop video calls and having the time to complete all the actions; but also balancing the number of activities we initiate to be creative and develop new business opportunities, with our ability to maximise each of them.

 

With so many interactions occurring during the course of the day it’s become easier to recognise new opportunity. Partners who could complement each other; customer needs that a solution could fulfil, audiences that will be interested in an innovative idea.

 

But conversely, we are all getting bombarded with new marketing campaigns, new invites, new promotions. Marketing teams have been active during the pandemic creating lots of new stuff. But is it working? How many offers pass the “so what” test?

 

This is equally true of acquisition teams. The pandemic has resulted in many business looking to acquire. Global M & A values reached their highest quarterly total in 5 years during Q4 2020.

 

And, as the Google Trends report shows, interest continues to grow.

 

 

However, with between 50% and 70% of acquisitions reportedly not meeting original expectations, buying another business does not guarantee success – instant or otherwise.

 

The consultants engaged with corporate M&As will stress the need for strategic planning, stakeholder and employee engagement. Where 1000s of people’s jobs are involved, the ability to keep staff motivated through regular and thought through communication is imperative. Typically, most roles in larger organisations don’t change immediately, it is the areas of overlap that initially come under review.

 

But in smaller acquisitions, typical in our partner community, this is different. The impact on individuals can be immediate; front line support staff have new customers to deal with, there are new contract terms to navigate and new decision makers to work with. Ensuring all staff know why the acquisition took place, what it means for them and how to communicate it to their customers, partners and suppliers, becomes paramount to success.

 

So why are you acquiring?

 

At a visionary level it must be about accelerating business growth. No growth means no return on investment, and, therefore, why would you do it?

 

However, growth like the integration, will take time. You need to have a realistic expectation over what period you will see the required return.

 

What is important is to identify the “must dos” for achieving that growth. For example they might be:

 

Realising the skills and talents of the new team? In which case keeping them becomes a priority.

 

Commercialising their IP within your existing customers? Educating current staff on the benefits of the IP to their customers becomes a priority.

 

Selling your current offerings to their customers? If so, then keeping the acquired company’s customers is a priority.

 

This is not an exhaustive list. Others might include geographic expansion, a new vendor opportunity or to increase margins through acquiring a competitor. Perhaps creating a new business to sell again or float. Reducing overall costs through staff or office de-duplication, might also play a part.

 

The need for due diligence beforehand is obvious, but this is not just about the financial history of the business or the individual employment contracts. How does the business function, who wins the business, who keeps it and how does it make decisions? And, how will customers react after the announcement? Are there conflicts of interest or contracts that can’t novate?

 

I recall an acquisition we made back in the ‘80s. The business was a great fit, enabled geographic expansion, put appropriately skilled people close to some of our larger customers. But it took significant time to integrate. Staff at the acquired location had been used to having a decision maker on hand at all times. When the individual left as part of the transaction and the natural successor wasn’t, we had an unforeseen problem. This resulted in members of the existing management team having to plan time to be at the new location and diluting their business focus. (This was before e-mail, mobile phones and long before video conferencing was around to help us).

 

Whatever the outcome of the due diligence and the list of reasons for making the acquisition, you need to decide on your post transaction priorities. The two or three things that will determine the success of the acquisition, that will deliver the ROI. Focus on making these happen. Build them into the new value proposition and your strategy, so everyone knows what they are. If some other identified benefits from the acquisition happen too, then great, but focus on delivering against the priorities.

 

And, don’t forget, the existing businesses have to continue to perform, whilst the whole organisation is transforming.  “Finding the new balance.”

 

If you are planning an acquisition, or have recently made one and would like some external support to develop a new value proposition for the combined organisation or business stream, then talk to us about our value proposition workshops.

 

We look forward to working with you.

 

Neil.cornish@techdata.com

 

Neil Cornish

Written by Neil Cornish

Neil Cornish is Business Development Manager at Tech Data UK

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