Purpose, process and people: the three Ps of M&A deals

Amazon and Whole Foods. Burger King and Popeyes. George Clooney (ok, his tequila company Casamigos) and Diageo. Disney and 21st Century Fox. Or maybe Comcast and 21st Century Fox. Cigna Corp. and Express Scripts Holding Co. And now, UK supermarkets Asda and Sainsbury’s.

I’m talking about merger and acquisition – or M&A – deals here of course. Last year, these stories were barely out of the business headlines, and in the first quarter of 2018 alone, global M&A deals totalled $1.2 trillion in value. Incredible!

Beyond the media hype, there’s bound to be much, much more going on. Joining two companies might sound simple – but it’s really not. And the ultimate price if you get it wrong can be the failure of both businesses. How do I know this? Well, I’ve been through the experience myself.

Incredibly, it was almost a decade ago that we began the process of merging Orange and T-Mobile in the UK... which led to the creation of EE, the UK’s largest mobile communications company.

We sold EE to BT (British Telecom) for ￡12.5bn in 2015, the culmination of many years of hard work and determination by a smart and dedicated team. Since then, EE has gone from strength to strength, even hitting the number one spot in the Sunday Times Best Companies list.

But it wasn’t always like this.

You can buy your way to the top spot in terms of customer numbers and sales by merging companies... but to maintain that leadership, you have to earn it. We worked hard to do that, and it’s something that the various management teams involved in these global mega-deals will have to face up to over the coming months and years as their mergers take shape.

As we took the third and fourth players in the market to create the number one, there were some key principles we followed. They’re relevant whether you work in telecoms, groceries or wherever:

1.     Purpose

Every business needs to find its purpose beyond the balance sheet. There’s a need to create something beyond the cold hard metrics of the financial success story. Giving your employees a reason to get out of bed in the morning beyond the pay check is critical.

2.     Process

The process in your business will make or break your success. Too draconian and bureaucratic and they will slow you down. Too loose and free, and you will encourage chaos and risk. The challenge is to find the sweet spot – the process nirvana where you have a way of doing business that drives control and enables measurement, but also encourages entrepreneurial thinking and accountability at all levels.

3.     People

If purpose is the heart and process is the backbone, then the people of your business are its soul. They are the key strategic asset of your company. You have to make tough choices up front to ensure you have the right people in the right places doing the right things – and invest in those who will take your business forward, creating a culture of achievement that is not afraid to reward great work and call out the bad.

Ultimately, the key job for any significant corporate change – whether you’re merging, growing, streamlining or transforming – is to build a business that has a clear purpose, with solid processes and brilliant people.

If you’re interested to know more, I actually wrote a book about what happened. It details where we did things right – and where we got it wrong. It’s available, as you might expect from some of my previous posts, on Amazon, and on the publisher’s website, Kogan Page.

I’d be interested to hear of your experience in merging companies and teams, and how you kept things on track – especially during the most challenging times.

Photo credit: ????