A recent Deloitte survey noted frequent misalignment between CFOs and company directors about the strategic rationale of M&A. The study concludes that CFOs and board members should align their M&A strategy for greater success.
Naturally, I’m not surprised by these findings. The likelihood of successful acquisition would increase if all parties shared the same strategy. After all, a successful acquisition must be 100 percent strategic in concept, planning, and execution. If you have multiple strategies driving your acquisition, you are bound to run into some problems.
In fact, I believe your acquisition strategy should be grounded in fulfilling one single need with each company you buy. Each time you should have only one reason for acquisition. To some, this may seem a little strange, as in “Why not kill two birds with one stone?”
Buying a company is like hiring new employees. You wouldn’t hire one person to fill simultaneous needs in sales, accounting and operations. The qualifications for each position are unique and you look for three different individuals to fill those roles.
The same concept applies to making an acquisition. Having a single, clear purpose keeps you focused on which markets to look at and which companies to consider. If you try to make one company fulfill multiple needs, you embark on a dangerous path that blurs your decision-making.
Vague thinking can lead to bad acquisitions and problematic integration. Although it may seem that killing two birds with one stone is cost-effective, it is likely to prove far more expensive in the long run. Trying to fulfill multiple needs through one acquisition meets none of them well. Singularity gives focus, and focus generates results.
*This post was adapted from David Braun’s Successful Acquisitions, available at Amazon.com