It appears that 2010 has been a good year for mergers and acquisitions. Nine months in to the year, nearly €9bn has been realised by European private equity firms, already surpassing the full-year total for 2009 by 25%. Of course this raises the interesting question of whether that flow of money is creating real value for people and business?
According to a recent survey by Hewitt Associates, the statistics are stark. Despite an optimistic flow of money, just over half (54%) of the deals don't achieve their stated objectives. What caught my eye about this research was the reason why. The research compared underperforming deals with those that over achieved their objectives. When they compared the difference, the one common differentiating factor was the failure to address human capital issues. In particular, the research indicates that proactive management of leadership and talent progression is the key to success.
A client of ours recently experimented with using Executive Coaching to support its key executives throughout the sale of their organisation. Crelos were brought in to offer coaching to each individual and to the transaction team as a whole. Whilst it's too early to say whether the deal itself will deliver on its stated financial and other objectives, what is clear is that the coaching had immediate and tangible benefits for the individuals and the organisation as a whole throughout the transaction itself.
The coaching programme brought legitimacy to conversations about whether the new organisation would be right for each individual. It also provided space for individuals and the team to see their way through the stresses and strains of dealing with a corporate transaction on top of an already busy business as usual agenda.
Any corporate transaction stirs up normal human responses, such as fear of losing authority, identity and power. A transaction also adds a degree of complexity to normal business decisions, requiring the executives to keep employees focused and engaged servicing clients, despite an uncertain future. Conversations about such things normally take place beneath the surface of the transaction. Left unmanaged, they put at risk the very value that the transaction sets out to create.
Providing Executive Coaching for teams and individuals throughout complex business transactions is just one way that M&A specialists, business leaders and investors could have more confidence that their investment will survive the transaction itself.