At a time when much of Asia is still reeling from the impact of Sars, by which I mean not only the disease itself but also the malaise which still seems to be gripping many companies and their executives, I am convinced that we will be seeing some good deals around.
I believe that there will be some good deals to be had in the entertainment and media sector as many companies are experiencing a chronic cash flow crunch.
Notwithstanding declining revenues,off the back of an advertising slump, it appears that some companies are bravely seeking to retain the valuable human capital which they will need if they are to take advantage of the eventual upturn.
This 'riding out the storm' approach is bound to result in opportunities for the fleet of foot entrepreneur to pick up target companies on the cheap.
Against that backdrop, it seems timely to examine the deal making or M&A process in order for CEOs to improve their chances of finding the right deals, executing them quickly and with the minimum of risk.
Beyond that, this will also help to accurately identify, fairly value and effectively capture the synergies that the deal has to offer.
When benchmarking companies that use M&A to enter new markets or to reach aggressive growth targets we found that there were various recurring features that accompany the successful dealmakers. These include:
- A clear articulation of the reasons for the deal and alignment of its M&A activity with its overall business strategy, adapting its M&A tactics as market conditions, corporate goals and capabilities change.
- A controlled process for managing every aspect of the deal. It should be transparent, provide a framework for leveraging best practice and apply lessons learnt from past deals.
- A deal 'champion' supported by committed people in each functional area - without exception a centralised team reporting direct to the CEO - always produces the best results.
- A comprehensive plan which facilitates process management by detailing the work to be done, as well as identifying those responsible and accountable for the results.
- An appreciation that speed is critical. Research amongst media executives clearly shows that the biggest regret of those directing M&A deals was their not moving faster -whether it was in selling a business or integrating an acquisition.
The plan itself must include a detailed timetable and milestones and needs to recognise that a successful deal process is nonlinear and has a continuous lifecycle. That means that any one step of the process should flow seamlessly into another.
My own experience having been involved in many deals is that failure at any of the above stages can have significant negative impact on the ultimate success of the deal - which should of course be measured by the ultimate impact on shareholder value.
There is some smart money to be made out there right now for the savvy media executive who can work quickly to put into place and follow the fundamental steps in the classic M&A process.