Why People are the Secret Ingredient to M&A Success

So often, when a company scales for accelerated organic growth or is preparing for a period of buy-side or sell-side M&A activity, they overlook the key ingredient to success – their people.

The soft side of scaling

The secret to scaling effectively is building the right team and supporting them well. Yes, processes, technology, operations, strategy and the leadership to guide them all is critical; but who’s going to do the work? Who will execute on the strategy? Who will achieve the goals?

Your people.

That’s why building a high-performing team is so important. As I’ve shared in previous articles, after you’ve established a clear destination, and built a roadmap to get there, you must turn your focus toward people.

Before you run the playbook that will help you prepare for and guide you through your next inflection point, you must ask who you need to be successful. Identify gaps in roles and talent, and recruit if necessary to ensure you have a high-performing team ready to take action.

Not convinced? Think about your team from a risk perspective.

The possible sale of a business, merger or acquisition is a critical moment in the lifecycle of a company. It holds potential for huge gain or loss. People are often caught up in that potential.

They can leave if they feel there won’t be a place for them on the other side of the inflection point. And any CEO knows that replacing a team member is a huge cost.

People make up the infrastructure of your organization. Without them, nothing gets accomplished. If you don’t handle people right during the scaling process or M&A activity, you could come out on the losing end of the equation.

Let 7 activities guide your approach

By working through these seven steps, you can minimize risk and maximize return during an inflection point.

#1: Establish the roles required

The first priority as you build out the team that will carry you through your inflection point is the roles required for success. The strategy you’ve built should inform what customer experience you will deliver and the roles required to fulfill the promise you make to your customers.

Along with this, assign the authority required for each role, understanding that authority is what decisions a person in a given role can make and what the parameters are for when approval must be gained.

Making sure people have the authority they need for their role is always important, but becomes even more critical during inflection points when decisions must be made quickly.

#2: Assess your talent

Start this assessment with your management and finance teams, who will anchor your ability to run a rigorous playbook and properly allocate resources. A forward-looking finance team with strong leadership can not only clearly understand and assess human resource needs across operations, marketing, and sales, but can ensure resources are allocated properly to enable continued growth.

Finance is an important aspect of driving process improvement and reengineering.

When finance leadership is not available to support change and innovation, companies will either forge ahead without foresight and ask for support too late, or not move forward at all. When finance leads change management, the right resources can be allocated to keep the company moving forward.

#3: Align available resources to required roles

An inflection point provides an ideal opportunity to stretch high-performing team members to reach new levels of professional growth. When highly-talented people capable of making good decisions are in roles that fit their strengths, agility is enabled across the organization.

Consider who you currently have who may stretch or fit into new roles. While not an easy task, it is worthwhile, and is especially critical for building out team you need to carry you through your inflection point and beyond.

#4: Leverage creative staffing options

As you assess and align talent to roles, don’t be afraid to leverage fractional, interim and staff augmentation approaches to build out your finance and other leadership teams. A highly experienced financial leader can step in for three to six months and lead your organization through its inflection point.

Someone who has experience guiding one organization after another brings a wealth of perspective and experience to their role, which your company is able to benefit from.

A part-time CFO may prove to provide the ideal amount of leadership your company needs now, and may save resources that can be allocated to other mission-critical roles.

Whatever you identify as your greatest need, remember that professionals engaged in fractional work, live for helping people successfully navigate an inflection point.

What may feel stressful and overwhelming to you, is invigorating for them. Because they thrive in this kind of environment, they are able to create high value during inflection points and are therefore well worth consideration for your firm.?

#5: Upgrade when needed

After establishing the roles you need and considering who can best fill them, you may realize that you do not have the person you need currently within your organization. In this case, engage in smart, forward-looking recruiting to get the right person with the right skill set to join your company.

#6: Give your team a great integrator

Even when you have all the right people in all the right seats across your organization, you need someone to drive the integration bus through the inflection point to your desired destination. This person should be able to coordinate your team with the rest of the business, aligning transition efforts at an operational level across the organization in a highly collaborative, effective manner.

Tip: Look for integrators at the financial leadership level as well, as this is critical for success and high morale throughout the inflection point!

#7: Give your team a great executive

Every key initiative that ends in success is typically sponsored by a board member or executive who champions it. Make sure your working groups or teams report to an executive sponsor or steering committee, if applicable.

For a smaller business, this sponsor may be an owner or board member. Whoever leads the initiative must have a safe space to go for additional resources and to resolve problems as they arise. That is what this sponsor provides.

With the right people in the right places, it’s time to turn your attention to measurement.

Always keep score

High performing professionals need to know what success looks like. Without it, they will become frustrated and potentially disengaged.

Much effort is required to prepare for or move through an inflection point. People need to know how success will be measured and what rewards await them on the other side. In additional to a detailed project plan, make sure you lay out dependencies, milestones and key performance indicators (KPIs).

Establish employee AND executive compensation plans that are tied to the goals your strategy seeks to achieve. Make sure a clear and dynamic dashboard is accessible to everyone on the team so progress can be gauged at any time.

With access to real time data, team members from leadership through to individual contributors can assess their performance and make adjustments as needed. Leverage your digital team to make your plan dynamic, interactive and available organization-wide.

Remember that any form of compensation can be tied to your strategy and consider not setting a cap on what your highest performers can earn. If their achievements contribute to more growth and revenue for the company, why would you put a limit on their effort, particularly when doing so equates to a limit of your own potential as a company?

Set shared, team and individual goals

It’s critical to incentivize everyone to achieve an extremely high level of performance. Shared, team and individual goals all matter and all drive performance.

Consider an example:

1. Shared goal: Our company will double in size.
2. Team goal: My division will grow by $50 million.
3. Individual goal: I will deliver $2 million in new sales revenue.

All three must be aligned and designed to support the same overall goal.

Leverage your financial leadership to set these goals to ensure alignment. When compensation plans are an afterthought, you should not be surprised if subpar results follow.

Keep people motivated and engaged with 2-week sprints

After initial goals are set and compensation has been tied to them, keep your team engaged with their results through an agile methodology. Two-week sprints allow complete alignment from everyone involved in the initiative on a rolling basis.

At check-ins, progress is reported, resources are allocated, and roadblocks are addressed.

Every goal completed is replaced with another yet to be tackled. Financial leaders must stay accessible and highly-engaged, as they guide the team through this ongoing process.

The bottom line

Every inflection point requires transparency and team members. When both are working in tandem, great things can be accomplished. With your team aligned for the goal, roles assigned and leaders in place, you’re ready for the next phase of inflection point navigation – capital solutions and cash management.

Need help navigating your inflection point? Let's chat?about how the 100 Day Playbook can help provide clarity for your business.