Mastering the merger and divestment dance

M and A dance

LONDON — Shell’s $70B takeover plans for BG Group makes for some striking headlines today. It’s big, and bold, and unexpected. Analysts are still studying it and trying to make up their minds, but it is closely aligned with trends in the larger markets now. Businesses globally are changing their make-up and relationships to power their organisations forward, and try to capture more value.

Here in the UK the BT and EE merger is a one of the top ten mergers proposed in the world right now, although it is uniquely local to the UK. The European Holcim-Lafarge tie-up is an on-again, off-again connection. If you follow the business pages closely you can see the elaborate dance that goes on as the businesses court and the regulators pose questions.

De-mergers or divestments are also making headlines and breaking new ground.The unbundling of BHP Billiton is a public process, no less dramatic than a merger.Lloyds Banking Group and TSB are saying farewell. The split in two of HP and ofBaxter Healthcare are also carefully managed change programmes.

The market is very large for mergers. And the value of them in increasing faster than the volume, but both are on the rise.

But are these mergers and demergers capturing all the intended value? And if not, what can be done?

Who is leading?

Each deal is unique. However, they will all have common characteristics. Every merger or demerger will require people to behave or perform differently. And that will often be where the value will begin to leak out of the deal.

We have seen consistently in past deals that companies cannot be clear enough about who will take the lead.  Even in a ‘merger of equals’ there is a dominant partner.  In demergers people may have worked together in the past, but that’s no indication of the future.

Each organisation has strengths and weaknesses, and without clarity, planning and strong leadership, people will always have difficulty operating on themselves — changes will be hard to make.

Solo or ensemble?

There is a natural reticence to involve too many people in the business change discussions. Business continuity is potentially at risk, so people need to be kept focused on the work that they have to do. However this view tends to be too narrowly interpreted. At the early, planning phase of business change activity, the circle tends to be too small. The preparation and planning for the announcement and implementation of the change cannot be started early enough. But instead the primaries tend to focus exclusively on ‘the deal’.

As a result of the ‘solo’ approach to planning a merger or de-merger too few plans are made, and value that leaders are so keen not to lose in the negotiation and due diligence phases, quickly leaks away once an unsuspecting team of people is thrust into the change without adequate planning or preparation.

Who calls the tune?

Organisations and management teams can find it uncomfortable to admit the extent to which their plans are influenced by others. Partners, industry leaders, bankers, governments and many others can have significant influence in the business change programme. And they need to be understood and managed too.

There should be no delay in recognising that some parts of the change are within the organisation’s control. ‘Emergent change’ in not so much an inconvenience, as a reality as regulators, investors and even acquired businesses influence the developing mergers or demergers.

What we know to be true

Value in mergers and demergers is delivered in the implementation. It is not the deal that drives the value, it is the ability to deliver the changes required to fulfill it’s promise. Executives tend to get too focused on the deal.

People will deliver the change. Along with the required systems and process changes, it will be the ability of people to adopt the changes that will make the difference between success and failure.

Initiation is easier than implementation. And there will be more scrutiny placed on the launch of the change than there will be on realising its values. In many businesses it is not even clear who is responsible for the successful and final implementation.

Mergers and demergers offer so much more than they are delivering. And in spite of all the complexity and flurry of executive attention, the challenges and obstacles can be significantly addressed by instituting and following through on change management principles.

The choreography might change, the floor might fill faster, and but the dance of M&A and divestments can capture much more value if the changes are properly managed.


The joys of restructuring, efficiency and cost-cutting


How much do those words strike fear into the hearts of the average executive?


Shouldn’t we be enthusiastic about organisations that are willing to change? Experience has always shown we have to constantly adapt to survive‎. And many companies now try to get ahead of that requirement, and make changes proactively so as to thrive.

That’s what restructuring, efficiency and cost-cutting is all about.

In fact, if you’re not actively making these changes … well, maybe you should worry about that.

Between analysts, the media, investors, customers and suppliers there are lots of people out there speculating about your business. Probably more than the people in your business. So what are you doing to stay ahead of the market and ahead of the speculators?

We are very interested to see the UK’s Management Consultancies Association‎(MCA) reporting in 2014 that consulting revenues were up in the UK. And they are up particularly in restructuring, efficiency and cost-cutting. They rose ahead of the broader economy. For some that might seem wrong, but it’s really an indication of ambition and change.

And we see growth in consulting fees as a leading indicator of broader growth in the economy. Because when businesses are adapting and adjusting in a proactive way (which tends to involve getting external advice) then you can be sure the ambitions and strategies are projecting growth.

‎Three thoughts on the changing consulting market and on ‘restructuring, efficiency and cost-cutting'(1) :

1. ‎Growth is coming in unexpected places

‎The MCA show retail and wholesale as being areas of significant growth. Which the still-wounded High Streets might seem to belie. But growth in the retail sector has always been backed by innovation, and there is a lot of innovation online and on the High Street at the moment. Lots. Like Tiger stores, and their movable, format, and the increasing number of independent cafes with great coffee, and heartfelt, home-cooked food.

Similarly Support Services and Water / Waste businesses are growing rapidly too. What do they know, what do they see, that others don’t yet?

2. It’s less about the strategic plan and more about implementation

Research shows that is where consulting is going at the moment. And we would wholeheartedly back that up. The ability to design good strategies is important, and there are many people who wish to do this. But our experience suggest that most strategies are good strategies. It is in the implementation where strategies tend to fail. That is why we are not surprised to see a greater emphasis on implementation.

That’s also the focus of what we do: successfully implement change.

3. Good implementation support is hard to find

Having said all that, we know that businesses still struggle to implement change effectively. We see it regularly. The value promised by change programmes – restructuring, efficiency and cost-cutting – is illusive. More often than not the changes aren’t delivered.

Delivering value in implementation requires strong change management support. Leaders need to be engaged. The direction of travel needs to be clearly communicated. Plans need to be coordinated. And more.

Restructuring, efficiency and cost-cutting are serious endeavours. They are needed to make business grow. They help ensure every sector is able to grow and people can continue to prosper. But they need consultancy support and they need to be implemented properly.


(1) With acknowledgement and thanks to the MCA’s UK Consulting Industry Statistics 2014

Five trends that will shape 2015


LONDON, 01 February 2015 — At the start of each new year most people’s mind will occasionally wander towards the possibilities of the future. And weigh up the successes and failures of the past.

However, it is possible to look forward and ‎project the future changes and challenges. And by looking at past experience and future opportunities you can help shape the future by supporting or mitigating trends.

Here’s my list of things to look out for in this coming year.

1. Everyone needs change

It’s been a long century so far. Wars and recessions. We know that the economy and ‎business-as-usual has changed forever. We know that the new normal isn’t yet clear. The future shape of markets can’t be 100% predicted. The east-west, north-south divides are not fully drawn… they’re certainly not what we expected.

But if you ask people working in business, particularly younger people they’ll say the same thing:

“Bring it on!”

People need change. Change brings opportunity. Few people see us going backwards. But forwards is yet to become clear.  And that doesn’t seem to matter. The organisations that will attract the best talent are the ones challenging the orthodoxy. The companies that investors will follow are those best able to manage change — those who court it. The best leaders will be those with the greatest change capability.

2. Beware the dragon’s tail

What we do know is that fewer big businesses and fewer big investors are controlling more and more of the controllable assets in big economies.

The Qataris alone have come home from a shopping spree that includes Paris St-Germain football club, Harrods, a lovely corner house on Regent’s Park, and this week a chunk of IAG, the owner of British Airways.

How will they manage all these? What will they do with them? Who knows?

The concentration of ownership and power in a few places means that many things on the edges, or even in the centre‎, will find themselves more easily affected by unrelated events. In a large business unrelated parts will be brought together. Shell will sell its service stations in Africa and Australia to help focus resources on its investments in Russia, for example.

When many different assets are owned by one big animal — the dragon of the title — the movements at one end can influence anything in its way at the other — the tail will sweep away things in its path because the head has moved directions.

Who can see BA and Qatari Airways merging? Not me, but you wouldn’t want to bet against it now. And how’s that different for Google, Microsoft, Time-Warner, ‎or dozens and dozens more?

3. Systems and processes ahead of people

We may be partly responsible, but there is a consistent and growing effort to ensure that managers are better equipped to manage.  And for big businesses to focus on their people: how are they feeling? Do they have the tools they need to deliver? Are they engaged?

And while that is good, and an improvement on 20 years ago, there are some basic changes that we see falling behind: the systems and processes that allow the organisation to operate.

Really effective systems and processes, if properly managed through change, will make a good business into a great business.  I am always struck when I visit businesses like General Electric, Coca-Cola or Disney as to how much time they spend thinking about their systems and processes.  They question them, change them, improve them all the time.  Many other companies simply adapt to their systems and processes and then try to forget they are there – even while people are crying out for system and process improvement.

This year we can address these gaps.

4. Retrenching expansion 

Like a teenager with too many broken hearts, this year business leaders won’t rush to grow their businesses, even as business is growing. The past seven years have been bruising.  Those who remember what their organisation was like before 2008 know that they can’t afford to go back to that level of internal cost or rush to expand.  Growth in revenues, even growth in profit, will not necessarily result in increased spending, investment or teams being allowed to increase.

Companies will continue to see top and bottom line growth, but without the confidence to allow their organisations to spend or hire more.

5. The year of the plan

If that sounds like many diverse factors and influences affecting the way we work, it’s because it is.  And they all move at different speeds and potentially have very different effects.

You may say that some of these won’t affect your business and that could be true, but do you know for certain what will, when and how much?

Maybe not.

And that’s part of the reason why we have declared 2015 to be the Year of the Plan. Effective planning can make all the difference between success and failure. Yet it is frequently overlooked in major change programmes.

Now is the time to plan.  We can help.


P.S. Able and How are hosting a series of tips, tutorials and webinars throughout the year – all designed to help you plan your organisation’s success in 2015. You can find out more by visiting We’ll also be posting updates on our LinkedIn and Twitter and we welcome your comments and feedback.

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