Tag Archive: mergers and acquisition

The Value of Implementation

August 5th, 2016
change initiative

Successful project implementation requires leadership and hard work to pick up the pieces when something goes wrong – because something always will.

Strategy and plans do not fail in formulation; they fail in implementation.  Time and time again, my clients prove this statement.

Although I am an expert in helping clients select the best ERP system to meet their objectives (and have developed a proprietary process for just this process – ACE), system implementations go awry during implementation. I also happen to be an expert at significant change initiatives in complex organizations (whether merger and acquisitions or culture change) – undoubtedly, they go off the rails during implementation; not formulation.  Thus, it is quite critical to consider the value of implementation.

Because these initiatives are core to success, it is worth thinking about what has the most impact on results. The problem with implementation is that it requires hard work and leadership. There aren’t short cuts on this path to success. For example, when going through a merger, acquisition or selling the business, it is important to think through how you’ll handle issues that arise.  If there is one certainty with these types of projects, it is that issues will arise.  If you haven’t figured out how to address them so that the team aligns with the path forward, damage will be done. Synergies will disappear. Margins will decline. Morale will drop. Customers might hit the road. Thinking through how to handle these scenarios in a way that aligns with “what you said you’ll do” and the company philosophy is important.

If nothing else, consider “thinking before you act” when it comes to implementation. It is easy to slide to the 80% fail rate to meet expectations.  You must be on your toes, proactive and fully understanding the value of implementation for success to consider following you.

 

Did you like this article? Continue reading on how to strengthen your Eagle Eye:

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M&A is on the Rise

July 28th, 2016

supply chain

A few weeks ago, I attended a ProVisors ODAM (Ontario-region based distributors and manufacturers group ­— don’t you love the name?!) session on the current state of the M&A market in Southern California — and specifically in the Inland Empire for manufacturers and distributors. The bottom line is that it remains a good time for M&A.

However, what I see frequently is business owners who think about M&A “too late” — if you want to sell for top dollar, you must start strategizing YEARS in advance. It can make a significant difference to the multiple of EBITDA (earnings before interest, taxes and depreciation) or revenue earned. For example, in the first quarter of 2016, the low multiple for EBITDA was 9.6 and the high end was 11.0. If you have even just a few million in EBITDA, this difference is interesting. And, this doesn’t get into the fact that if you have the right advisors and are proactively thinking about these concepts, you can significantly raise the multiple over the top end. There are countless examples.

Even if you don’t plan to sell, shouldn’t you be interested in increasing the value of your business for an ESOP (employee stock ownership plan), to recognize your top talent and to reinvest in business growth? There is something to be said for acting as though you will sell no matter your plans. When I was VP of Operations, we went through a preparation for sale process, and it was invaluable in understanding the business and profit drivers — something we should have dug into regardless of any potential sale!

One tip to implement this week:

So, I bet you are wondering what could possibly be done with M&A in a week. You wouldn’t be alone; however, you have to start sometime.  Why not this week?  If you are a business owner or executive of a privately held company, think about your long-term plans — what do you want to do with the business eventually?  Or what can you do to help realize these plans? I’m sure there are countless activities. Pick one that you think is particularly important and start there. Gather your team and talk about it.

If you are in a public company, the key is to think about stock value. Almost all of the same initiatives are important to increasing the value of your stock. Pick one and start.

If you are not in a leadership position, don’t despair. Do you know what the plans are within your organization? If not, find out. Ask questions. Find out how you can contribute. If you are in the loop, find a way that you can contribute to increasing the value of the company and start doing it. Run it by your manager if you need resources and to keep him/her in the loop. But, who is going to stop you from increasing value? To increase value, you have to provide better service, discover new markets, increase profitability, find ways to automate, etc. Aren’t they all “no-brainers”?

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”



How to Defy the Odds with Culture Change

July 25th, 2013
change management map

Execution must be a core component of your organization’s culture

Between 70-80%+ of culture change programs, such as mergers and acquisitions, fail to produce the results originally expected. Yet, there are still many private equity firms and companies aggressively searching to merge and/or acquire a business – and certainly companies embark on major change initiatives, such as ERP implementations and reorganization plans every day. Why is the success rate so low? And, why can’t 70-80%+ of the merger/acquisition leadership teams find a way to be part of the 20%?

I’ve had first-hand experience working with companies in various stages of mergers and acquisitions and other significant change projects, and the answers are incredibly simple yet hard to execute. First, most mergers/acquisitions do not fail in the strategy. The synergies might be compelling, the opportunities vast; however, the key lies in poor execution. So, how do we stand out in the crowd as part of the 20%?

People and execution

One of the key issues is that people tend to become numbers – have you heard one of the following, “We can save X labor dollars,” “after consolidating Y function . . . ,” “we need to implement Z program to offset our 10% attrition – whether customers and/or employees”? Stop! Instead, value people, as they will be the ones who determine whether you’ll be one of the 20%.

First, make sure you:

1. Listen – to your employees, your customers, your suppliers, etc.

2. Involve them in the process – clarify the vision/end state and ask for involvement in defining the path to achieve the vision, encourage debate on the various alternatives and their benefits/costs to achieve a goal, ask for feedback and ideas, value their concerns and input and encourage brainstorming of solutions.

3. Communicate frequently, and consistently – do what you say you’ll do – this does not require that you have all the answers or that you communicate items you are unable to communicate yet it even works with bad news. People will value your communication if they know it is genuine, if they can count on you to consistently keep them updated, to answer their questions and if they know you value them and will treat them fairly and respectfully. And, I found that doing what you say you’ll do is much more challenging than it sounds, but it is #1 to success. The bottom line is that people are your #1 asset. Instead of focusing on equipment, labor and materials, first focus on people.

Next, execution is key. Execution must be a core component of your organization’s culture. What does that mean? The best definition I’ve seen of culture is from Alan Weiss – “Culture is simply that set of beliefs that governs behavior.” Thinking in terms of that definition, execution must be valued in your organization. Or, another way to say this is that the discipline of how your organization gets things done is more important than the “form” (who reports to who, how it looks, etc.). Of course, this takes us back to #1 – people. In addition, as Larry Bossidy and Ram Charan say in Execution, “People think of execution as the tactical side of the business. That’s the first big mistake. Tactics are central to execution, but execution is not tactics. Execution is fundamental to strategy and has to shape it. No worthwhile strategy can be planned without taking into account the organization’s ability to execute it.”

I’ve found there to be several key ingredients in successful execution – people, leadership, clear communication of the vision/end state, communication of the why’s and how’s (For example: Why are we following this path? How will this help us in the marketplace?), communication/integration to each person’s goals (including how they make a difference), tools/training required, follow-up, feedback . . . and repeat.

If the majority of your focus is on people and execution, you’ll likely be one of the 20%.