COMMENTARY

7 stumbling blocks to M&A success

Clashing business development cultures can spell disaster

Mergers and acquisitions continue to remake the government contracting market, fueled by shifting landscapes in defense spending, procurement modifications and competitive pressures. Smaller acquisitions are becoming more prevalent than the larger, scale-driven transactions of previous years.


For our annual M&A special report, click here.


In the frenzy to transform via mergers and acquisitions, significant issues might be overlooked in the haste to get smaller deals done. There are seven significant stumbling blocks to achieving growth objectives after a merger or acquisition. Overlooking any one of them could adversely affect a firm’s long-term growth.

1. M&A Strategy

Was the decision to expand based on a desire to chase shifting budget and procurement priorities? Or does a long-term strategy exist that includes adding expertise to your capabilities from firms in adjacent markets? The latter approach could bolster your market position by offering customers a comprehensive, integrated suite of products and services.

2. Qualitative vs. Quantitative Due Diligence

Due diligence means more than merely crunching numbers; it involves qualitative as well as quantitative information gathering. Take the time to evaluate the target company’s business development leadership and team from a potential and historical perspective, and assess the resident quality and capability of the entire business development organization. Is it mostly organic-growth farmers and few, if any, new-business hunters? You want to find a well-balanced, cohesive team that is working a real pipeline of opportunities with a high win rate.

3. Divergent Business Development Cultures: Push vs. Pull

Does your potential merger partner have a “push boxes” culture — that is, are products/services pressed on customers to solve any conceivable problem? Or does the business development team seek out customer issues and then decide if the opportunity is a good match for what the firm offers? The first position indicates a traditional sales, or push, culture. The second illustrates a customer-centric culture in which customers rely on your expertise, pull you into a discussion of their situation and trust you to help them solve their problems.

4. Differing Structures for Business Development Organizations

Does your potential acquisition have a centralized business development organization, a business development capability embedded in the business units or a hybrid of the two? Does the current structure mesh with yours or will the combination add a layer of complexity to what already exists at your firm? Acquisitions frequently result in combined entities with independent organizations hoarding resources and critical intelligence while dissipating the efficiencies and operational synergies you’ve banked on for the combined organization.

5. Disparate Business Development Plans

Business plans are not the same as business development plans. If business development plans exist at the potential acquisition, are they outdated and unachievable in the current circumstances? In addition to a business development strategy, what you want to see are road maps that chart how to reach concrete revenue objectives in the current business climate and have buy-in from the entire business development team.

6. Diverse and Outdated Business Development Processes

The government contracting world has changed. If business development processes exist at your potential merger partner, does everyone use them and is there proof of their effectiveness? Could you be acquiring a business development organization that’s committed to outdated processes and shuns anything new? In that situation, even if the team is struggling, members will likely reject any solid business case to change what they are doing.

7. Strong Business Development Leadership

Does your potential acquisition have strong business development leaders who model effective behavior, take ownership of plans, drive processes and lead personnel to reach revenue objectives? Or is everyone reluctant to challenge the status quo, embrace new ways of developing business and risk something different in this changed environment? If so, one of your first initiatives should be to find strong business development leaders to fill that vacuum. A good business development leader will serve as the catalyst to jump-start revenue growth and achieve the numbers you expect after the merger.

About the Author

Bill Scheessele is CEO of MBDi, a business development professional services firm. He leads a team of government contracting business growth experts. Learn more about MBDi and their revenue growth resources at www.mbdi.com.

Reader Comments

Thu, Mar 18, 2010 Joyce Bosc Boscobel Marketing Communications, Inc.

Companies should also apply the same due diligence and analysis of all the departments such as human resources, finance, legal, marketing and operations. M&A success also depends on a comprehensive Internal Communications Program to elicit support from executives, middle management and employees before, during and after the transaction. The quality, quantity, timing and content of communications among these parties is what makes or breaks the deal.

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!