Establish strategic coordination and management mechanisms to ensure successful mergers and acquisitions

The turmoil in the global economy has once again brought opportunities for mergers and acquisitions.

However, not every merger is smooth sailing, and unsuccessful mergers and acquisitions abound. Some data show that the failure rate of Chinese companies' overseas mergers and acquisitions is at least 50%.

Recently, a SASAC company's president study class went to the United States to study. During the period, when asked what content they were most interested in the M&A course, some executives responded: "We have acquired 60 or 70 companies. After the merger, I am most interested in the integration issue after the merger.” In fact, this SASAC company has done so many mergers and acquisitions and has naturally experienced post-merger integration. The reason why he attaches so much importance to it actually highlights the difficulty of post-merger integration.

Post-M&A Strategic Synergy

The key to post-M&A integration is to achieve strategic synergy.

Strategic synergy needs to be fully researched and demonstrated in advance (this is also the homework that many companies must do before mergers and acquisitions), sufficient communication and discussion with the management team of the merger and acquisition enterprise, and in-depth discussions on feasibility and operability. It is the basis of strategic synergy and the most difficult place. Because different senior management teams have their own unique backgrounds and cultures, there may be differences in the development direction and strategy of the company. Therefore, it is very necessary to reach a consensus between the two senior management teams in order to lay an important foundation for strategic coordination and implementation. Base.

Thus, the first step for both parties should be to clarify and align their strategies. This step will help the company to quickly integrate and coordinate the top management team. The next step is to establish a set of execution and management systems that decompose the strategy into all levels of the organization, supplemented by a management process to identify and solve problems. A strategic management system thus established will create a transparent strategic communication environment at the level of the corporate board of directors and the top management team, who can quickly understand how the company is implementing its business strategy through red, yellow and green displays. From our long-term experience in this field, the methodology of the Balanced Scorecard can effectively help us establish such a strategic management system. Moreover, more and more companies are also initially using the Balanced Scorecard strategic management tool. By sorting out the post-merger strategic synergy, develop a strategy map and a balanced scorecard, and then develop important strategic synergy indicators and action plans according to the synergy strategy, and dynamically monitor and manage the determined synergy strategy.

Post-M&A Operational Synergy

From the perspective of the focus of strategic synergy, different companies have different M&A backgrounds and different main purposes of M&A, so the focus of strategic integration will also be different. Some may pay attention to the brands and customers of the acquired company, some may focus on the products and technical assets of the acquired company, etc. Based on the above considerations, we have created an original strategic synergy integration model (see Figure 1):

The post-merger strategic synergy integration model divides strategic synergy into six important areas, including Brand and market, customer resource synergy, channel and network, product and technology, supply chain system synergy, and talent and culture synergy, etc., enterprises need to define important strategic goals and specific implementation measures around six key areas, and form a systematic, Actionable post-merger synergy strategies and measures.

The above-mentioned strategic synergy integration model and the balanced scorecard strategic management system are similar in purpose, and all aspects of strategic synergy can be closely integrated with all dimensions of the balanced scorecard. The internal process dimension and learning growth dimension of the Balanced Scorecard contain six aspects of integration. Only the successful integration of internal process-level and learning-growth-level objectives can effectively improve customer satisfaction, gain market share, and ultimately achieve desired financial goals.

Case: M Group's overseas M&A dream: M&A and strategic synergy

M Group, one of the largest furniture manufacturing companies in Asia, its main business includes wood processing, furniture manufacturing, furniture retailing and chemical business, with an annual turnover of billions of dollars, and the export volume has reached hundreds of millions of dollars, maintaining a rapid growth of about 30% every year. In 2009, the company acquired a well-known European furniture design and sales company (S company), which further improved the global furniture supply chain, achieved rapid business growth, and completed the strategic layout of the global furniture industry chain.

Strategic synergy and integration are the top priorities

The purpose of M Group's acquisition of this S company is to build a global furniture value chain. After the acquisition of S Company, M Group did not bring much changes to S Company's existing business and operation team. "In the past year, we have mainly done three aspects of work for S Company. First, to achieve a smooth transition of customers and promote Second, the rapid integration further enhanced the brand influence of M Group and S Company. The acquisition of S Company greatly enhanced the new product development capability, enriched the product style and product mix, and brought significant impact on customer development and market growth. The third is to carry out human resources and team building, and on the basis of fully respecting the corporate culture of S company, strengthen the communication and integration of different companies in terms of culture.”

At the same time, M Group is committed to using the balanced scorecard strategy The management system creates an "SFO organization". First, the Group's development strategy for the next three years is systematically sorted out with the help of the strategy map management tool, and the strategic monitoring focus and implementation path (measurement indicators and action plans) are further planned through the Balanced Scorecard. Here On this basis, it further decomposed and sorted out the development strategies of each business unit (subsidiary), and developed the strategy map and scorecard of the lower-level business unit (subsidiary). Through the analysis of the strategies of M Group and S Company, in-depth discussions were conducted in important areas such as brand, market, customers, products and technology, supply chain system, talents and culture, and the corresponding strategic synergy focus of M Group and S Company was clarified. .

Post-M&A Strategic Management Mechanism

After M&A, the most important thing is to establish a strategic collaborative management mechanism to ensure effective operation. In the process of the balanced scorecard strategic management project, M Group established an organizational system of strategic management as shown in Figure 2.

To ensure the execution and management of strategic synergies, Group M reviews the strategy on a monthly basis , Check and review the implementation of strategic coordination goals and actions, discover obstacles in the implementation process in time, analyze and discuss important strategic projects through strategic review meetings, and dynamically analyze and rectify strategic implementation through strategic review. , and adjust strategic priorities as needed.

The merger between M Group and S Corporation was successful. In addition to the foresightedness and forward-looking strategic layout of leaders, the factors to ensure success are the strategic synergy and integration with M&A companies.