Strategy Execution Life Cycle – First three phases of the Guberno’s Strategy Execution Life Cycle – identifying and defining, analysing and syndicating, formulating and documenting.
Background context – Over a period of six months, the international civil construction company had refined its medium term growth strategy through a structured and engaging strategy development process. The leadership team interrogated the current position of the business, including its capability platform and its outcome performance. In parallel, the business explored its current competitive positioning relative to changing competitor, industry, and societal trends. After exploring a range of strategic alternatives the leadership team aligned around its preferred strategic positioning to underpin its medium term strategic growth aspirations. With a strong analytical and aligned strategic planning foundation, the business was able to identify capability needs and explore both internal and external pathways to deliver these needs.
Strategic Challenge – The strategic challenge identified appropriate external companies that possessed capabilities, that if combined through merger or acquisition transactions, could accelerate the delivery of the company’s corporate strategy. The project was focused equally on identifying suitable strategic partners where combining capabilities in a systemic way could deliver benefits to both parties.
Strategic Activities – The project progressed through a range of activities to deliver a prioritised acquisition and strategic partner target list.
- Market scanning – This process used public information to create a competitor map. Importantly, the process involved grouping like companies and separating them from other groups of companies that played in the market but compete in different ways based on different capability platforms. Dissecting competitor capability platforms was a key focus of this first phase scanning.
- Engaging internal operating experts – Once a base competitor map was developed, the process engaged key internal operating experts in a series of workshops. The workshops were focused on completing a gap analysis of the market maps by adding and removing companies from the competitor map. Operating exerts were engaged in the first phase of prioritisation based on the operating experience around the competitor’s capability platforms.
- Engaging internal technology experts – To improve exposure to specialist engineering, design, and emerging technologies, the project team engaged with internal technology and research and development experts. They were able to provide insights into emerging capabilities that weren’t evident in the market by the operating teams.
- Target evaluation and prioritisation – based on the information gained through the syndication process, the target list was enhanced with a range of financial information and valuation ranges.
Outcomes – The project delivered a prioritised target acquisition and strategic partnership list. This was not based on bespoke options, but rather an integrated story around a series of transactions that could deliver an industry leading capability platform to accelerate delivery of the company’s growth strategy.
Key Learnings – There were two core learnings from the project. Firstly, the importance in unlocking the immense knowledge about the market and competitors that sit within the operating business. It is not uncommon for M&A assessment is the purview of corporate strategy teams that can be disconnected from the operating business. Engaging the operating business in the evaluation and assessment of merger and acquisition alternatives can deliver a better prioritised acquisition target list and do so in a more efficient way. Equally, engaging the operating business is an important first step in building alignment for the subsequent process of business integration should a merger or acquisition transaction proceed.
Secondly, the project reinforced the importance of progressing a merger and acquisition assessment against the backdrop of a well-defined and highly aligned corporate strategy. While many acquisitions fail to deliver on their promise, starting with a clear strategic framework with identified capabilities can improve the odds of a value adding outcome.