M&A is the only Growth strategy ahead
M&A is the only Growth strategy ahead. In Europe, only the 15% of the third-generation (family-owned) companies finally survive. According to Inc. magazine, just 4% of businesses make it after the 10 years. Do you have in your business plan an M&A scenario?
M&A is the only Growth strategy ahead
On July 18, Britain’s takeover regulator said, that it would review its ruling that Walt Disney might have to acquire UK’s broadcaster Sky for at least 14 pounds a share.
The Israeli military electronics firm Elbit Systems has just completed two acquisitions in the United States and Israel, and remains on the lookout for potential takeover targets in the U.S. and Europe, a top official said Wednesday.
Chinese e-commerce giant Alibaba said it has agreed to acquire China’s Focus Media Information Technology Co Ltd to tap into the digital marketing sector (e-commerce boost unit…).
Greece -according to Reuters- has shortlisted Anglo-Swiss Glencore and Swiss Vitol to submit a binding bid for a majority stake in the country’s biggest oil refiner Hellenic Petroleum (obliged by the running country’s MoU with IMF//ECB/EC), its privatisation agency said.
Does all these sound familiar? Have you pictured what is going on in the corporate world, and how this might affect your business growth, even if you are at the level of a shop/e-shop owner?
What is going on?
The world is combining forces, synergies, and resources. The world is lowering costs and joins productions lines.
Your company’s growth plan (if you have one…) as a detailed action plan for the coming years, complete with financial projections and market tactics, should work on an M&A scenario. The company’s senior leaders are all nodding yes! Your Strategy officer sees ahead great disruptions that you possibly won’t go through on your own cash, people, resources.
M&A (hostile or not) is the only way forward for the European markets and segments. Why? First of all, the majority of E.U companies are family-owned or SMB’s. Their capital to scale and innovate is minimum. Secondly, scaling and geographically expanding can’t be done without local networks for which you need to invest more and more. Last but not least, premium, revenues, and income are decreasing by the new price-quality equation…
According to Inc. magazine, just 4% of businesses make it after the 10 years.
In Europe, only 15% of the third-generation (family-owned) companies finally survive. Many reasons… They become tired of the repetitive business routine. They remain without real change and improvements, to keep up with the competition. They miss on capital sources… They don’t learn and evolve.
Leadership and ownership’ succession planning. Nope! Preparing the next generation of Managers? Nope! Many business owners refuse to see the future of their business and the Brand they have at hand.
If that path of logic sounds familiar, you should be worried. Really worried! Because all that best-laid plan has done is produce, in your mind, a false perception of certainty, that you have control over something inherently uncontrollable and uncertain: the future.
The difference between Strategy and Planning.
Therein lies the difference between strategy and planning. Different animals. What a good strategy actually does is produce discomfort, apprehension, and perhaps a bit of fear. These are the very signals that you make tough choices. Planning is about details, time, and budget. Nothing more.
Mike Tyson said it perfectly: “Everyone has a plan until they get punched in the mouth.” How many times has your plan failed to produce the expected revenue, forcing you to cut costs, freeze investments?
M&A cases will be thousands in the next years…
- Cisco will acquire Accompany, maker of an artificial intelligence-driven platform for sales prospects.
- Warren Buffett-backed USG efforts to open sale talks with Germany’s Knauf, and (again) Warren Buffett bided for Unilever.
- T-Mobile & Sprint together (third and fourth U.S. carriers), combined a subscriber base of 127 million customers
- Sainsbury’s & Asda are now one UK supermarket chain (£12billion mega-merger), ready to lower prices by around 10%.
- Interpublic, the world’s fourth-largest agency company paid $2.3 billion for Acxiom, a data-focused Marketing business.
- PepsiCo eyes outside investors for its Creators League.
- General Motors, 110 years old, has made several acquisitions to develop a fleet of self-driving cars (tech startup Cruise Automation, Strobe startup specializing in lidar sensors etc.).
- Walmart also moved into the tech space to facilitate its creation of a digital marketplace that goes beyond merely selling its inventory online (in a couple of years it has acquired digital fashion retailers like Jet.com, Bonobos, Modcloth).
Mergers are like marriages. They are the bringing together of two individuals. If you wouldn’t marry someone for the ‘operational efficiencies’ they offer in the running of a household, then why would you combine two companies with unique cultures and identities for that reason?