The M&A Solution: A Value-Based Approach to Integrate Companies
Mergers and acquisitions (M&As) are woven into the fabric of entrepreneurship. Currently, about $2 trillion is spent every year on acquisitions. This figure is made even more astounding when compared to the failure rate of M&As: 70-90%. M&As are crucial for continued growth and success, yet countless businesses fail to make the most of their potential. A seasoned expert leading dozens of successful M&As to date, Dan Scales is bringing a much needed update to the conventional wisdom that is killing businesses. His book, The M&A Solution: A Value-Based Approach to Integrate Companies, is a new playbook for leaders who refuse to let their M&As fall flat.
These deals are engineered by smart people hiring even smarter people to crunch the numbers before signing on the dotted line. However, more than two-thirds of the time, these M&As fail to meet their objectives. Don knew there had to be a common denominator—some piece of information that was universal and, in this case, always overlooked. It hit him like a ton of bricks.
“Deals floundered not because we lacked due diligence. Not because someone failed to analyze the data correctly. Not because the goals were unreachable to begin with,” Don says. “They floundered because the corporate values were misaligned.”
Leadership, values, and culture were the missing variables. Organizations prize culture nearly above all other things—their culture and values are made into selling points for customers and prospective team members alike. It takes years and money that they are happy to spend in order to build something in which they take pride. But when it comes time for M&As, these values are left entirely out of the equation. Companies with opposing values merge, there is strife as to which culture will endure, top performers leave, the prospect of growth shrinks, and the companies look for an exit. This is the way things are done today.
In his 30-plus years in the professional services business, Don Scales has worked with people on both ends of these deals. In The M&A Solution, Don is reinforcing what works in the traditional approach while adding his new value metrics for success. Far from corporate fluff, his book and method seek to qualify culture and values in a way that creates actionable data for those leading a merger or acquisition. His Values Compatibility Profile is poised to become standard in the new M&A checklists.
“When you finish the book,” Don explains, “you will not only have a deeper understanding of why M&As need to be values-based and why you ignore values at your own peril, but I’ll have also supplied you with checklists and audit templates to guide you through the process.”