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PUTTING YOUR BEST FOOT FORWARD M & A practices

Ever notice the airline magazine ads that preach that you can learn negotiation in an afternoon.  I sure have.  Interestingly enough, it seems appealing to be able to convince someone (or a group) that my way is the best way.  Ultimately, this magical talent will transform me from average Joe to bearing an "N" (for negotiator) under my suit.

 

In mergers and acquisitions, winning is not always best.  First, in simple terms, a merger is the combining of assets of two or more organizational units.  An acquisition requires one company to take over the assets of another.  In the case of working towards these outcomes, there is more to it than meets the eye, and this holds true whether we are talking of large or small operations.

 

Here are some things for the would-be negotiator to keep in mind:

 

1.       The first mind-set is to realize that the "N" is to create a win-win situation for the shareholders of the firm, and that begins with a clear purpose of what your firm is about.  In the recent past, we've seen a number of mergers and acquisitions that were not strategically correct, as witnessed by the over-purchasing, failures, and breakups during the "Age of the Dot.Com."  I remember an employee once holding his pocket and stating that he "ha[d] money in his pocket and it's burning a hole in it."  Just because you can, does not mean you should.  M&A requires peoplepower and time that quite often would be better spent building than purchasing.

 

2.       Second, the parties must state what their true intentions are in the deal.  One firm might want the research capacity of another firm while another might hope that the combination will allow it to gain more market penetration.  If parties are true to their word, then the relationship has a chance of surviving.

 

3.       Third, put your best people in the project.  More failures are due to the lack of clout of the individuals involved than any other asset allocation.  If the real decision-making parties are hidden in the background waiting for the next hand to be played, misguided information and results are bound to happen.

 

Just like a lottery ticket, the dreams of waking up one day with a pile of cash on one's front door are realized infrequently.  Creating a relationship takes time and effort.  Just think of the newsworthy deals that have been months or years in the works--some only to be discarded.  Start off on the right foot.  Plan your company's directives, make your objectives known, get the right people in the mix, and lastly....never do a deal that will only make you as good as the two parties combined at the table.  The objective is to have more synergy together than apart.  Citibank has become over three times its size in its last merger.

© MM David & Lorrie Goldsmith

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01.08.2019 (130 days ago)
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