Growth is something which can be realized in many different ways: operational excellence with Six Sigma trajectories; product or technology innovation, either incremental or radical; business model innovation; or plain old mergers and acquisitions (M&A). Of course calling it plain old does no justice to the complexity of these kinds of transitions. But fact is that when you only focus on bringing value which directly shows in your balance sheet M&A can provide you with a quick fix. The real challenge start then with Post Merger Integration (PMI), so after the purchase. According to Strategy Business to road to successful PMI goes by the cities Vision, Architecture of Change, Architecture of the New Company, and Leadership. Further research has shown that when success of M&A is compared to industry peers only 48.7% resulted in increased value. Most of the times M&A is quite costly, so how to increase the success and value?
In many cases failure of PMI is said to be based on things such as cultural differences, not only between companies, but also countries of origin. When failure is due to cultural aspects the new organisation lacks a common language which normally grows quite organic during years and of course a company’s leadership. Cultural differences can only be resolved through long, extensive projects in which everybody needs to get to know everybody and all have to agree, basically not an option when the goal is to increase value on the short run. Setting up a new business model, based on competencies and capabilities, does provide such a common language. Moreover PMI is the moment to set a new business model. Due to the central position of a business model in the ways business is done, this also reflects on the culture. Cultural differences can be overcome by creating a new common language, and culture, by setting a new business model.
