It is imperative you grow your merger and acquisition skills.
We are experiencing ‘the perfect storm’. The global economy is sputtering, the US dollar as the global vehicle currency is under attack, supply chains are disrupted, inflation is returning us to the 1980’s level, and all this is taking place under the Sword of Damocles — Ukraine vs Russian war.
As a result anticipate increased numbers of mergers and acquisitions by competitors within your industry. A necessary growth strategy to sustain your organization.
I’ll be posting more ‘background’ materials on mergers and acquisitions to assist you in this regard.
I interviewed Shelley McDade A CEO with experience in M and A’s. Shelley undertook four mergers and acquisitions within the credit union industry and did so successfully. A remarkable record given the very high failure rate executing this growth strategy. Indeed 75% of mergers and acquisitions are outright failures (Business Week). I assisted Shelley in these initiatives as the Firm’s consultant.
Shelley highlights some of the concerns in a video that are worth a few moments of your time. View the video on the BLOG Strategy Tab – Mergers and Acquisitions | Terry Power’s Strategic Thinking Concepts (terrypowerstrategy.com) .
Elon Musk was kind enough to share final observations from his successful acquisition of Twitter.
- Be strategic from day one
Elon Musk advises that we must be cautious with our time, money, and energy. Before announcing he took time undertaking a reconnaissance of Twitter. He did so by purchasing shares that enabled him to look at the financial statements and get some sense of the issues and where was synergy- efficiency – effectiveness he might harvest from the acquisition.
Elon has provided some clues as to the rationale why he undertook the purchase. In my earlier post “Elon Musk’s Successful Acquisition of Twitter – the Coup of the Century” (Elon Musk’s Successful Acquisition of Twitter – the Coup of the Century. | Terry Power’s Strategic Thinking Concepts (terrypowerstrategy.com)) I suggest Elon will now allow Twitter longer length post. Thereby Twitter becomes is a real-time newspaper. A newspaper that will be significant competition for the old legacy papers with the stale information infrastructure…
The lesson to learn… This time is never wasted on reconnaissance. Sun Tzu said: “Win all without fighting” (1) Sun Tzu 8 “Win all without fighting …” – YouTube . … If it is a public company then purchase one share. That will entitle you to the annual reports and financial statements that often include some sense of direction as to where your target company is heading.
- be unpredictable
Elon Musk followed Sun Tzu advice: “If the enemy leaves the door open you must rush in”… “(1) Sun Tzu 9 “If the enemy leaves the door open …” – YouTube . One of the 10 Principles of War is the element of surprise. As you pivot to new markets often the elements of surprise will be a key factor in your success. Sometimes conducting operations in the stealth mode is a good tactic. The 10 Principles of War can be found on the Blog site under the Military tab. – The 10 Principles of War | Terry Power’s Strategic Thinking Concepts (terrypowerstrategy.com)
Musk implemented another Principle of War. –Concentration of Force. Concentration of force involves the decisive, synchronized application of superior fighting power (conceptual, physical and moral) to realize intended effects, when and where required. Musk offer $54.20 billion and represented it to be his only offer — take it or leave it. This swift audacious move left a legacy media and opposing stakeholders in disarray. The offer came from nowhere to acquire the jewel in the social media crown news. I am of the opinion they still don’t realize the new value proposition yet to be revealed by Musk.
Consider stealth mode. Keep your cards and close your vest – do not to alert your competitor. It is important that you occupy the key terrain in your industry before the competition understands your strategic and tactical moves: … before they can mount an offensive.
- Keep an eye for a lucrative market
As strategist you must be constantly be watching for ‘the synapse of light’ in your industry indicating change. You must move the earliest opportunity exploit the emerging shift or mitigate the damage that will be incur to your organization.
As strategist it is important to close your office door for 20 minutes a day and review the news, not just the sports page BUT the business and financial pages, – How do they ‘fit’ — look for these synapses of light. Unfortunately most managers are looking down most of the day dealing with the daily issues and not looking up for a few moments refection on the ‘so what’s’! Those that find the time for this reflective critical thinking will be the leaders within the organization.
According to recent social media industry statistics, Twitter is now one of the most popular social networks in the world, based on active users. Twitter has 192 million monetized daily active users in the fourth quarter of 2020.
Elon Musk stated that one of his motivations for owning Twitter is to realise its “amazing potential” – and that he isn’t even interested in generating money from it. He already has plenty of it, and multibillionaires can afford to prioritize differently.
Undertaking a Blue Ocean Strategy Workshop is a good exercise to find the unpolished innovation that appear in this new industrial age. Like artifacts appearing on a beach the’ turbulence and disruptive’ ecosystems shifts the ‘sand’ and now reveals glimpses of opportunities that have been overlooked. Musk found one!
- Due diligence
Before you put your money into any investment, you must first understand it. Elon Musk is a Twitter fanatic with 83.8 million followers. He tweets a lot, sometimes controversially, and sometimes disastrously.
The key word here is—understand— if you don’t understand and cannot explain why you invested then that investments not for you. There are great many considerations include identifying the key personnel. Are they tied down with “golden handcuffs” A topic for another post? Often these key personnel are in fact what you’re buying not the bricks and mortar.
- The power to negotiate is as valuable to money
Elon Musk’s $54.20 billion offer for Twitter is simply too excellent to pass up. Prior to the purchase, the world’s richest man agreed to pay $44. per share for the social network, but if the company rejects his non-binding offer, which he defines as “best and final,” he may sell his 9% holding.
One may argue that Elon Musk’s negotiation power was one of the primary factors in that moved the board of directors to sell Twitter.
Indeed in some circumstances if the offer was rejected and he sold his 9+ percent of Twitter at prices close to the $44. Given he acquired 3 million of them for less than $35 represents a very nice consolation prize.
As in all strategic moves… in “the land of the blind one eyed man is king”.
NOTE.
Blue Ocean Strategic Workshop- (Short Online). A good place to start if you determine ‘wholesale’ changes are required is by undergoing a Blue Ocean Strategic Workshop.
We anticipate being able to offer in a few months a short online practical and applied Blue Ocean Strategic Workshop.
The workshop will examining some emerging trends, innovation within specific industry/organizations. Attendees will be required to do some ‘directed’ research prior to the workshop. This will include examining the organization’s current value proposition.
The participants will be expected on completion of the workshop to have identified for further analysis potential Blue Ocean Strategy (s) that will enable them to reposition their organization to emerging red oceans.
The program will be designed for small groups of attendees from selected organizations in specified industries. In this new industrial age of remarkable transformative innovations and the accompanying disruptions organizations struggling with maintain margins and facing fierce competition should consider undertaking this workshop.
Watch for a notice on BLOG the site later in the summer. Subscribe and we will notify you the details.
