The Merger Mindset offers a unique perspective for leaders'those executives whose companies, reputations, and futures will thrive or fail because of a deal or a series of deals. This book for leaders helps decision-makers deal with the powerful undercurrents and interpersonal dynamics at play in every deal, and no one is more qualified to write it than Constance Dierickx and Linda Henman.
Other books on mergers, acquisitions, and divestitures overwhelmingly have one characteristic in common: theyre technical. Attorneys write books about the legal and contractual aspects of deals; project management experts write from the point of view of managing tasks and schedules; and investment bankers write about valuation and negotiation. The Merger Mindset presents an amalgamation of what Drs. Dierickx and Henman have observed'and in many cases, helped to create'in more than 65 cumulative years of consulting with Fortune 500 companies, privately-held firms, family-owned businesses, and military organizations. Their in-the-trenches experiences spurred them to arrive at this premise: To position their organizations for more success, leaders cant shy away from the high stakes, tough decisions about their futures.
This book maps the key steps in the M & A journey. It takes the reader through how to make the decision to grow acquisitively, identify roadblocks and typical wrong turns, and ultimately shows how to unlock their decision-making potential while navigating an increasingly uncertain world. Through compelling stories and surprising research findings, readers will discover that theres much more to the decision-making that drives M & A deals than they ever imagined, and they will come away with tools to help them deepen their understanding of what it takes to succeed. A fascinating read, the text weaves lessons that surface from the stories with highly pragmatic advice about suggested mindset, checklists, processes, and diagnostic tools. Readers will understand that while M & A deals arent simple, leaders dont have to overly complicate them either. Instead, they can simplify the process if they remember hope shouldnt serve as a strategy, and they cant abdicate or delegate their leadership responsibilities.
The lessons from mergers and acquisitions are critical to those considering a deal, but applied elsewhere, they have equal value, even though noticing them takes more effort. This is the essence of leadership: doing the hard work of ensuring that the gulf between strategy and tactics does not lead to either over simplification or needless complexity.
Contents
Acknowledgments ix
Introduction xi
Part I High Stakes 1
Chapter 1 The High-Stakes World of M&A 3
Why Do a Deal? 4
Five Essential Traits of a Successful Deal 6
Deal Progression 11
Vision 14
Financial synergy 14
Operations 14
Talent 15
Culture 15
The Insidious Nature of Fear 16
Conclusion 20
Note 20
Chapter 2 High Stakes: High Risk, Low Visibility 21
Betting on Value 21
Are You in Jeopardy? 24
What People Think of You Matters 27
No One Likes Shaky Ground 29
Gambling with Loyalty 33
Conclusion 36
Note 36
Chapter 3 Think of All Weve Been Through 37
Where We Have Been 37
Where Are We Going? 40
How Will We Know When We Get There? 42
What Good Will It Do? 46
Tough Calls Start with 'Why?' 48
Conclusion 50
Notes 51
Part II Leadership Traps 53
Chapter 4 Necessary Uncertainty: Overconfidence,
Rationalization, and Bias 55
You Cant Shine a Light in Every Dark Corner 56
Overconfidence 59
Rationalization 62
Bias 63
Spreadsheets Dont Make You Smart 67
Conclusion 70
Notes 71
Chapter 5 Talent Is Not Your Greatest Asset 73
Take the Risk Out of People Decisions 73
E5 Star Performer Model 76
Ethics: Doing Well by Doing Right 77
Expertise: The Raw Data of Talent 78
Excellence: Consistency of Performance 78
Enterprise: Setting the Bar 79
Experience: The Yesterdays That Define the Tomorrows 79
Leading through Ambiguity 80
Whom Do You Want to Leave? 84
Why You Need Gyroscopes 86
Conclusion 90
Notes 91
Chapter 6 Critical M&A Decisions 93
What It Takes to Decide 94
If I Only Had a Heart 98
Courage Is Not Recklessness 100
The Rewards of Heavy Mettle 102
Deals Create Decision-Making Traps 104
Groupthink Trap 104
Complexity Trap 105
Status Quo Trap 106
Anchoring Trap 107
Sunk-Cost Trap 108
Inference and Judgment Trap 109
Conclusion 109
Notes 110
Part III Correlations, Cause, and Culture 111
Chapter 7 Sailing in Uncharted Waters 113
Rough-Water Rafting 114
Implement or Drown 116
The Messiness of Metrics 119
Keep Your Customers in the Boat 123
Run a Triple Play 125
Conclusion 130
Notes 130
Chapter 8 This Makes Cents 131
Formulating the Strategy for the Deal 132
Setting Criteria for the Deal 134
Identifying and Evaluating Targets 137
Evaluating People and Planning Succession 139
Integration 142
Conclusion 145
Notes 145
Chapter 9 Elements of Culture 147
Beyond the Code of Conduct 148
Setting the Pace 152
Organizational Learning 153
Capacity and Appetite for Change 157
Building New Neural Networks 160
Conclusion 162
Notes 163
Chapter 10 You Bought It; Dont Break It 165
Integrating with a Merger Mindset 166
Set Objectives; Measure Success;
Reap the Benefits 168
How Will You Be Better Off If You Integrate? 171
Integration Dos and Donts 174
Cast Your Leadership Shadow 177
Conclusion 181
Notes 181
Index 183
