This website is for small to mid-sized business (SMB) owners, CEO, and Presidents. I will be taking an in-depth look at situations such as M&A; The good, The bad and The ugly side of incentive systems, What is more important: a good business strategy or operational effectiveness, what’s better: a board of directors or an advisory board, etc.
My business experience has centered around solving business problems that for one reason or another people inside the company couldn’t resolve or didn’t want to touch it with the proverbial ‘ten-foot pole’. Also, being a director on public and private boards and starting and selling two companies provides other perspectives that have been valuable. I have been through the University of Hard Knocks. This experience is not just what doesn’t work, but more importantly what does work and what to avoid. I will also include real life examples as I like to tell stories and they are a powerful learning tool.
In working with companies, I have learned a couple of critical operating philosophies that always drive my work. First is the value of good questions. In discussing any topic, I will identify what questions weren’t asked on the front end and what questions should always be asked. If your company does not have a culture of valuing good questions you are in for trouble. What? What does a culture of valuing questions have to do with anything? “Questioning is a uniquely powerful tool for unlocking value and solving problems in a company: It spurs learning and the exchange of ideas, it fuels innovation and performance improvement, it builds rapport and trust among team members. And it can mitigate business risk by uncovering unforeseen pitfalls and hazards. “Harvard Business Review”. If leadership is uncomfortable with questions ‘it won’t be smooth sailing’.
The second philosophy centers around problem solving or the approach to problem solving. We have all heard the saying; ‘don’t bring me problems bring me solutions’, or what about ‘you do not get ahead here by bringing up problems. Good problem solving involves raising a lot of questions on the front end before implementing solutions. The other aspect in the approach to problem solving is where do you start. I have two rules in approaching problem solving: one, “The cause of a problem is almost never where the symptoms show up” and, as Albert Einstein stated: “If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it”.
In working with Leaders/Owners of business I have observed one common thread that ran through all of them; their intentions were almost always honorable. They wanted a legacy for family members, a great place to work for employees, employees to act like owners of the business, to be good community members, and so on. Intentions maybe honorable but a business environment is messy. Business environments by nature are messy places because they are made up of people: employees, competitors, customers, suppliers, bankers, investors, etc. and people are funny animals. It is what makes all business the same and yet unique. Malcom Gladwell’s book the Bomber Mafia is a study of how dreams go awry. As a point of reference, I would recommend it to anyone in a leadership position. My point is leaders may start out with the best of intentions but the outcome either doesn’t match their original objective or if it does, the unintended consequences are difficult to accept. For example, I have seen more than my share of incentive systems for senior management teams that had the good intentions of driving company performance forward but end up having the opposite effect.
When I post blogs, my intentions are to get leader/owners to look at business situations from a different perspective but with the caveat that some people are always going to take things in ways I don’t intend.
The first series of blogs are on Mergers and Acquisitions and the process for a well-executed transaction. Why M&A? The M&A marketplace continues to be strong and will remain so for the foreseeable future for SMB. The tail end of the Boomer generation is nearing the end of their working career, the competitive marketplace is increasingly volatile driven by the regulatory and tax environment and the recent pandemic. M&A is viewed primarily as a growth strategy however, it is fraught with pitfalls if not executed well. The landscape of badly executed M&A’s is extensive and were unnecessary if leaders had M&A experience and an effective M&A process to follow. After competing work with a client on a ‘botched’ acquisition the person made an interesting statement, he said “if he would of brought in help at the start he won’t have had to have a nurse come in to help the wounded and bury the dead.”
A quick example of why the need to utilize a M&A process to avoid costly pitfalls. The owner of a small Midwest technology services company in a rapidly growing market segment implemented a rapid ‘roll up’ strategy of similar or larger companies across the Midwest and then planned to exist through sale. The Operational Executive started to raise concerns to the Owner about how some acquired companies were not performing as intended, “difficulty in integrating them”. I was engaged to develop an integration process for acquired companies. When asking the Owner, several front-end and my favorite; ‘why are you doing this’ I got an emotional “don’t mess with my acquisition profile, concentrate on integration”! After completion of the integration model and debriefing with the Owner and Operations Executive the Owner called me something that has the initials SOB. He apologized and then explained that not only would he have to ‘cut loose’ two recent acquisitions but withdraw from current negotiations with another. Because of the lack of a robust front-end process, he saw that problems with some acquired companies were occurring because of what he was doing or not doing on the ‘front end’. We then constructed the ‘front end’ process for his acquisition strategy, and he moved forward. The Owner successfully completed his strategy with the sale of a valuable company.
So, here are some examples of questions I will cover in upcoming M&A blogs?
- Why is getting the right price misleading?
- How does falling in ‘love’ effect a deal?
- When is it over, “the hard work of the deal”?
- What are the THREE most important aspects for success?
- “Why don’t employees like change” or “are integration problems really created by cultural difference”?
- What typically gets companies ‘into trouble’ with M&A’s?
- What are the critical questions to ask internally throughout the process?
- What does an effective M&A process look like and who is ‘the best’ at M&A transactions?