There's more than one way to M&A

To merge or not to merge, that is the question. Or is it?  We’re paraphrasing Shakespeare but a ‘straightforward’ M&A may not be the only way for companies to capitalise on the opportunities that our ever-changing world has presented. There are options when it comes to m&A.  

According to Deloitte’s 2022 M&A trends survey: The future of M&A companies are increasingly looking toward alternative alliances to bolster their M&A options.  

38% of companies exploring opportunities favoured alternative approaches such as strategic alliances, partnerships, joint ventures, and special purpose acquisition companies. Only 35% are looking at more traditional M&A, and 27% at divestitures.  

One way (or another).  

These findings are echoed in Bain & Company’s 2022 Global M&A Report. This revealed that between 2017 and 2020 combined, joint venture and strategic alliance volume grew by nearly 4.6%, with popularity growing due to ‘maintained flexibility, mitigating the risks of large-scale M&As and bring more variety to their M&A investments.’ 

It’s an approach which has echoes in innovation theory. In our book, Building a Culture of Innovation, we commented that ‘by its very nature innovation means collaboration.’ And that collaboration is no longer confined to a single team or organisation. Leaders looking to innovate may well seek out partners across all areas from academia to other organisations,  and even competitors. So it’s hardly surprising that businesses are looking outside the traditional M&A route in order to deliver differentiated solutions. 

When two don’t become one.  

This new spirit of openness and flexibility also reflects back on the more traditional mergers and acquisitions. Just because the documents are signed, doesn’t automatically mean two become one.  

Now parallel running or phased integrations are the name of the game. Organisations are also seeing M&A activities as a catalyst for change, with 63% stating that the success of their M&A was moderately or highly dependent on a successful transformation. 

Whatever the approach, one fundamental truth remains unaltered.: A mismatched culture is still the prime reason for mergers and acquisitions failing to achieve the desired outcomes. Whenever two or more organisations come together, success is dependent on leaders identifying, planning, and actioning the steps required for cultural integration.  

Factoring culture into the equation, and importantly the initial integration, will ensure that the M&A, alliance, or divestiture will be deemed a success by boards, investors, staff, and your bottom line. In today’s multi-faceted world there’s more than one option for M&A. But whichever option is chosen, make sure that a cultural integration plan guides your steps on the pathway to success. 

Want a hand with the way you’re doing your M&A? We can help set you up for success, get in touch.