It’s been a bumper year for global M&A activity.  Depending on which news feed you like to follow, total deal value is predicted to hit between $3.6tn and $6tn by the time the fireworks go off on December 31st, 2022 looks set to be even busier.

So as the dust settles and everyone gets the chance to weigh each other up IRL, will the trillionnaire shopping spree bring the success that is predicted, or will much of it be confined to the financial write-offs of history?

The path to M&A failure is a well-trodden and familiar tale. It’s been estimated in HBR that a massive 70% – 90% of mergers and acquisitions fail, and research from PWC shows 65% of acquires say that cultural issues hampered the creation of value in their last deal.   The ambition for 10x growth; the ability to leapfrog to market leader; the sector defining levels of innovation and growth on offer, all fade into the distance if leaders and managers don’t quickly work out how to unite, engage and energise their people in the mission to grow.

Even the most skilled comms and brand teams can’t prevent the perception that a business is heading south if the first symbolic act of the new relationship is cutting costs and constraining budgets, rather than listening, engaging and understanding how to turbo-charge success.

This is true of any organisation, but particularly so of those businesses which pride themselves on their attitudes towards their customers and people, their social consciousness and corporate citizenship.

These cultural barometers are sensitive measurement instruments whose stock is on the rise when it comes to deal-making.  But they continue to be overlooked as they don’t translate well onto the balance sheet.

Successful M&A’s are those where both sides appreciate what the other brings to the table.  Asda and Walmart’s partnership was based on mutual understanding and respect. In a recent documentary looking back at its success, Archie Norman, CEO at the time, makes much of the fact that the bigger party, Walmart, realised it could learn a lot from it’s UK partner and vice-versa.  Significantly, they also realised both organisations had a lot in common when it came to values, belief and purpose.  That shared belief counts for a lot, and is why current high profile UK deals, such as Morrison’s and TDC and the takeover of LV=, are coming under such scrutiny.

Both Morrison’s and LV= have significant heritage and a clear proposition and purpose for their people and customers.  How will these deals enhance that in a genuine and authentic way?  More importantly, as the spectre of ‘asset-stripping’ rears its head yet again, how are the value creators retained?

The world of work and the war for talent is more complicated than ever.  There’s a shortage of skill and experience and a wealth of opportunity. Exciting futures are just a Zoom call away, and people are reevaluating their lives now their back bedroom is their primary place of work.

Purpose is the anchor to keep talent close, to navigate through the post-deal fogginess, to continue to drive growth.

According to Boston Consulting Group (BCG), over the past 12 years purpose driven organisations have seen their value increase by 175% compared to the median average of 86%.  Over the past 15 years, purpose driven organisations have grown 10x faster than the market.

10x faster growth through purpose?  Maybe this ‘purpose thing’ is worth a second thought.

 

If you have been thinking about how your organisation can use purpose to fuel your growth but don’t know where to start, drop me an email dave.morris@kinandco.com for an initial chat and I would be happy to share some tips, stories and ideas that might help.