Mergers & Acquisitions are complex transactions. Transnational or, in many of our cases, transcontinental transactions are even more challenging. Companies are taking these risks because the failure rates for organic growth are even higher. M&A deals can be divided in the phases of deal preparation, deal execution and post-merger integration. Few people realize that valueis primarily destroyed by inappropriate integration concepts, closely followed by poor strategic fit. The deal execution can be further described as the technical part, which is still important but not the key factor.
NxtAsia cares about the phases of deal preparation and post-merger integration. A clean technical execution is part of our profession but not the major challenge. During our assignments we deal with the following tasks:
| • | How to determine the strategic reasons behind the potential acquisition and how to assess in which way the deal could add value to the company. |
| • | How to define a clear profile of potential targets. |
| • | How to generate and evaluate critical information of targets during the filtering process. |
| • | How to assess the seller’s intention and how to measure the cultural fit. |
| • | How to separate good and bad assets, so balancing historical burden and future value. |
| • | How to grant a positive further engagement of the seller in the future business. |
| • | How to keep price negotiation clearly in line of the initial budget. |
| • | How to plan and roll-out a cross-border integration process. |
| • | How to react on escalations during the integration process. |
| • | How to evaluate the success of an acquisition post-merger. |
| • | How to control a JV and which processes have to be installed. |
| • | How to market the new organization and its products. |
| • | Etc. |
Paying a high price hurts. However, analysis of cross-border acquisitions over various industries shows that the price has limited impact when it comes to the success evaluation of deals. For the majority of the bad cases, the selected acquisition targets were simply the wrong pick and mistakes were made in the filtering process. In addition, the cultural gap between both parties was significant and more importantly, companies were not fully prepared to overcome the hurdles.
As we define the deal preparation and post-merger integration phases to be the most critical ones, below we have listed our potential support during these stages:
| • | Deal preparation – companies have visions about the future but often are they uncertain about the missing piece to complete the big picture. By experience we know how to split the overall vision into smaller pieces. We jointly discuss, correct, guide and eventually finalize with our clients the profile of the missing piece. We bring in our operations expertise and our specific market knowledge. We do not change the big picture but we understand the differing variables of markets. NxtAsia is one of the major company-, industry- and market data providers in the Asian market. Hence, we are able to shorten the time for identifying potential targets so that we can invest valuable time resources for the conversion of the long list into a short list. We believe that this process is one of the most critical one. We do a lot of background investigation about shareholders, management teams, product- and client structures, supply sources and financials prior to an official due diligence. That enables our clients to run a qualitative filtering process and to decide whether or not to enter the next stage. |
| • | Post-merger integration – achieving “alignments” is the key for success. When companies fight with cultural gaps, language barriers and time zones it is most important to get things aligned. Alignment of business strategy, alignment of brand image, alignment of sales structure, alignment of pricing, alignment of supply sources and most essentially – alignment of corporate culture and values. Building and implementing an aligned company culture takes time and so we advise to give it time. However, giving time alone does not imply an automated process with guaranteed progress. NxtAsia functions as coach, mediator and initiator of change processes. Our job is to guide the process and to create the environment to foster the change. Again, often our market knowledge is the winning edge in the game. |
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