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The Story of Effective M&A: 2012 Corporate Development Priorities

Posted By Holly Lyke Ho Gland, June 27, 2012 at 1:19 PM, in Category: Investors-Finance

It comes as no surprise to learn that corporate development executives are focusing on the challenges associated with M&A. Specifically, respondents’ face challenges with early-stage M&A activities such as aligning acquisition strategy with the corporate strategy, target identification, and balancing risk across a portfolio of acquisition opportunities. In addition to M&A issues, major challenges lie in assessing the strategic fit of the businesses in the company’s portfolio and finding relevant strategic partners. Corporate development executives will, however, be expected to overcome these problems without additional resources—budgets and staffing are expected to stay the same in 2012.

To understand the reasons behind corporate development’s challenges, respondents were asked to “root cause” them in terms of staffing, process, technology/systems, or strategic alignment. For most of the challenges, issues with staffing were the root causes—understaffing and in some instances a lack of the necessary skill sets. While the root cause of the biggest challenge (aligning acquisition strategy with corporate strategy) was a lack of common objectives.

The survey examined the issue of M&A integration. In general, companies are no longer conducting M&A to capture market share alone. For 2012, respondents indicate that their M&A activity is intended to secure capabilities, products, and customers. Accordingly, this focus on capabilities as the deal’s value driver makes effective integration even more important than in previous years. To get a better understanding of companies’ implementation procedures, respondents were asked a series of questions on their:

- Integration Team—overall companies tend to rely on ad hoc integration teams rather than dedicating full- or part-time staff. Consequently there is little consistency in how integrations are managed and no opportunity for integration team members to develop the necessary skills. Additionally, using ad hoc teams increases the length of time spent on integration as members have to (re)learn their role and responsibilities for each acquisition.

- Integration Planning—respondents reported that integration teams begin planning during the due diligence phase. By conducting the operational due diligence, integration teams are able to identify synergies and divergences early, incorporate remedies into the integration plan, and determine the time and resources necessary to accomplish the deal’s goals.

- Communication Strategy—corporate development executives indicate that they employ a wide range of communications during the integration including employee emails, deal-specific talking points for client-facing staff, and newsletters. These communications have one thing in common, they are unidirectional—speaking to the employee—and do not include mechanisms for feedback.

Access the report for the full analysis of the survey results, including an examination by business model.

Strategy Implementation and Acquisition Integration - 2012 Corporate Strategy and Corporate Development Priorities Survey Results

from Frost & Sullivan


Category: Investors-Finance
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Written by Holly Lyke Ho Gland

Holly is the research lead for the Growth Team Membership™ (GTM) program. Holly identifies and profiles best practices that address the main challenges faced by the leadership in key functions that support the CEO in driving growth strategies. Since joining Frost & Sullivan in 2008, Holly has developed Best Practice Guidebooks for executives in Corporate Strategy, Corporate Development, R&D, Market Research and Competitive Intelligence. In addition to her best practices work, Holly manages GTM’s annual priorities surveys of senior executives within Marketing, Corporate Strategy, Sales Leadership, Corporate Development, and Innovation/R&D. Prior to joining Frost & Sullivan, Holly worked for three years at Sam Houston State University. There she was an instructor and a research assistant on research projects analyzing public perceptions of natural resource management in natural gas, power and water.



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