MARCH 2015 / NO. 1
TAGS: MANAGEMENT, MERGERS & ACQUISITIONS, SHAREHOLDER, VALUE, COMFORT ZONES

To win the strategic game

“To win the strategic game, whether in war, chess or business, you must make a few strategic choices that will disorient your competition, so that they are unable to respond effectively”
The statement above should be common practice when we prepare ourselves to make strategic decisions. ‘Strategic’ is one of the most misused words in management today and is often used to mean ‘important’. However, strategic decisions are about decisions with consequences of future impact for the organization. Compare this with M&A activity. Numerous research studies during the past 25 years have confirmed that 85 percent of all mergers and acquisitions fail. In the financial world, business as usual is back to where we were before the start of the 2008 crisis and it seems that Mergers & Acquisitions are back in the boardrooms. Will the same mistakes be made again with the aim of maximizing shareholder value? It looks like it.

Shareholder value versus the economic value of M&A

We are currently supporting an European company which is preparing a ‘hostile’ acquisition. The target company is not even aware of this.
To gain maximum success over and above simply shareholder value we apply our strategic intelligence efforts to what we call future economic drivers:
  1. Beyond shareholder value: What are the future returns on investment and future risks for stakeholders apart from those who are only shareholders?
  2. A deep dive in the economic drivers: what are the economic consequences and future risks for customers, employees, suppliers, the social environment and society? What is the added value for customers with better and cheaper product and service solutions and how much value will be created by destroying or creating new employment?
  3. Social media: how can we develop the BARs (Before Action Reviews) related to current and future insights, assumptions and hypotheses of the potentially hostile acquisition?
This implies that our strategic intelligence efforts have to deliver strategic options away from the obvious answers, making assumptions and hypotheses away from usual routines and away from comfort zones, looking beyond one’s own industry sector of towards a more complete competitive arena while avoiding future blind spots.
“To become better means change, to become perfect means to change frequently”, Winston Churchill
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