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February 28, 2019 | Report
What is important about leadership for an M&A deal? How do successful acquirers get leadership right?
A new survey by The Conference Board shows that successful acquirers assess and identify the right leaders. They also spend more time gathering the views of influential stakeholders about individual leaders rather than relying on interviews with leaders themselves. Successful M&A dealmakers are also more likely to engage with middle managers in the target company than less successful ones. The study also identifies the different leadership skills needed at each phase of an M&A transaction.
Mergers and acquisitions (M&As) are driven by the quest for value creation and the conviction that the deal will result in new sources of value and ultimately competitive advantage. While the potential reward is great, the risk that the deal will fail to meet its objectives remain very high, often due to human capital (HC) factors.
M&A teams often take a highly transactional view of HC issues in a deal—culture integration plans, retention bonuses, labor laws across countries, etc. This transactional view remains important; however, companies are missing a broader and more strategic issue to ensure successful deal objectives—namely the potential impact of leadership. Those involved in M&A transactions understand the importance of leadership, though they often underestimate how critical the leadership aspect can be and are unsure what to do about it. Leaders drive culture within organizations. Leaders support engagement of employees. Identifying and deploying the right leaders for M&A deals and integration is paramount to ensuring the successful outcome of deal objectives.
Having the appropriate leadership capability to support M&A deals is about minimizing business risk—a risk that most companies cannot afford to ignore. Our research points to the need to take a much wider perspective on M&A leadership than acquirers have traditionally taken. M&A leadership is not just about extracting the most skilled leaders from the target companies. It is also about consideration of M&A leadership in its broadest sense in which a combination of different leaders—both in the target and acquiring organization—take a shared responsibility for the success of the deal.
This new research examines how leadership factors impact outcomes of an M&A deal. Based on a survey, follow-up interviews with organizations, and a literature review, we uncovered the following insights about what successful organizations do to focus on leadership to support positive deal outcomes.
This publication is exclusive to members of The Conference Board.
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