Improve M&A Business Results Through Training

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By Mark Herndon
Oct 26, 2016

Everyone says it all the time: “M&A is a skill set, an enterprise competency, an organizational capability.” 

We certainly believe that, and I’ll bet you do, too. Common sense and practical experiences (both good and bad!) have demonstrated time and again that you have to work to get your organization good at M&A. Even with deep pockets of expertise, for example, in the corporate development department, or perhaps in the IT shop, many organizations still struggle to achieve consistently superior business results from M&A.

Failure factors are too many to mention here, but as we all acknowledge, deals can and do still go off the rails at every phase of the process and at any level of deal-count experience. (See Failure Can Occur at Any Phase of the Process; Don’t Fumble on the Goal Line; and Principles for Integration Success, among others.)

Likewise, building a best-in-class M&A capability requires many essential components and almost certainly includes experience, adequate resources, tools / methodology, software solutions, leadership and many other elements we have previously addressed. 

"Is there any wonder the failure factor or rate of under-performance remains so high?"

But what about M&A-related training? Hopefully, this blog post will give you confidence – and ammunition – to answer this question persuasively. In some respects, it is hard to argue with the value of training. If the only results you could obtain by training your M&A teams were such core objectives as understanding basic M&A processes, aligning all functional teams and levels involved, gleaning new ideas to apply, networking on best practices, overcoming prior obstacles or challenges, etc., those would probably be enough to easily justify the time and cost. But based on our survey, the State of M&A Integration Effectiveness 2014, we believe the right training can also make a significant difference in your ability to achieve improved business results from M&A. 

As indicated in this week’s downloadable resource, Improve M&A Business Results Through Training, our first impressions of the survey findings on this particular topic didn’t come as a surprise as much as it did an indictment on senior leaders!

In the survey, we asked this five-part question: “Our company provides formal training regarding M&A best practices, processes and skills to: A) Senior executives; B) Corporate development team members; C) Due diligence team members; D) Integration team members; and, E) Managers, supervisors and employees at large.” First, let’s look at just the raw frequency data. In other words, what is the overall percentage of organizations reporting that they train their staff and M&A teams? When you look at the charts on slide 1, remember, “blue is bad,” with roughly 60 percent of organizations across the board reporting they did NOT provide any formal M&A training to these groups or individuals.

Write-in comments further highlighted the need for improvement in M&A training, with many comments along these lines:

  •  “Our training consists only of ‘on the job training’ – you have to pick it up in the line of fire.”
     
  • “Our current formal training approach is generally insufficient.”
     
  • “All training is informal and through ‘tribal knowledge sharing.’”
     
  • "Some local pockets of training do exist, but all team members are not trained.”

So I just have to ask: is there any wonder the failure factor and rate of under-performance remains so high? Clearly this stands out as an important area of improvement for many acquirers. Most folks get that. But the question I want to spotlight today is, “So what?” Will M&A training help you more consistently achieve superior business results with M&A? That’s where slide 2 in today’s download may be instructive.

Those of you who are regular readers of this blog or those who attended or downloaded our recent webinar, Integration Practices that ‘Move the Needle’ on Results, will remember that we did extensive regression analysis and predictive modeling to test specific integration best practices against a set of 12 typical business result outcome objectives such as capturing revenue growth synergies, minimizing value erosion and maximizing the pace of integration, among others.

This analysis allowed us to determine which integration best practices had the strongest statistical correlation in directly driving specific business outcome results. To make sure we were comparing apples to apples, we were careful to compare “success to success” so that we could isolate the impact of each integration best practice in the study. To do that, we found the sub-set of only those organizations that reported consistently achieving one or more of the 12 business result outcomes. Next, we determined whether or not those same organizations also used each specific integration best practice. By comparing those that had successful business result outcomes with the use each best practice to those that had successful business result outcomes without the use each the best practice, we were able to illustrate the impact in terms of a percentage increase in successful outcomes linked to the use of each best practice.

That’s what is depicted in slide 2 of today’s download. For each aspect of the five-part question (Senior Executives, Corporate Development, Due diligence team, Integration team, etc.) we captured the top five business results most directly impacted by providing training to that group or team. Please note that the percentages are not frequency responses (e.g., “how many did this”), but the percentage of improvement in successful outcomes over those respondents who do not train this same group or team. Follow?

It would make a good happy hour debate sometime to sort out just why the numbers came out like they did and why certain business outcome result categories were affected more than others, or at all. But here’s what stands out to me: if you want to do everything possible to increase the business results you actually achieve with your next M&A, an improved approach to M&A training will help to stack the deck for success, and in some cases, may increase your likelihood of success by as much as one-third or one-half compared to your competitors who don’t train their M&A teams. 

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