Scott C. Whitaker on completing successful cross-border mergers and acquisitions: An interview by Bob Morris

WhitakerScott Whitaker is a Partner with Global PMI Partners and has been involved in dozens of mergers and acquisitions totaling nearly $100 billion in value. Industry experience includes healthcare, financial services, telecommunications, gaming, hospitality, chemicals, oil & gas, industrial manufacturing, retail and consumer durables. Scott has worked internationally in Canada, China, Europe, and Africa on a variety of assignments.

Whitaker holds a B.A. from the University of North Carolina at Chapel Hill and is the author of Mergers & Acquisitions Integration Handbook: Helping Companies Realize The Full Value of Acquisitions, a comprehensive resource to help companies create a scalable post-merger or acquisition integration process that accelerates operating and business benefit goal realization.

His most recent book is Cross-Border Mergers and Acquisitions published by John Wiley & Sons (April 2016).

He has held senior level marketing, sales and operations positions with several Fortune 500 companies. Scott and has been awarded the Certified Management Consultant designation from the Institute of Management Consultants and is the past President of the Institute of Management Consultants in Georgia. Scott also teaches for the ACGU (Association of Corporate Growth University) and is past conference speaker and webinar presenter for the MMIBA (Middle Market Investment Banking Association) and NACVA (National Association of Certified Valuation Analysts).

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Morris: Is completing a successful M&A today more difficult, less difficult, or about the same as it was (let’s say) ten years ago? Please explain.

Whitaker: I would say that it has always been and will be difficult, as there are plenty of studies that indicate that companies are successful about 50% of the time (success being them being able to deliver on the original deal objectives). With the street’s continued focus on short term results buyers of public companies will always be under pressure to deliver results within 1-2 years after close. So I would say it’s about the same in terms of degree of difficulty.

Morris: Peter Drucker once suggested that “culture eats strategy for breakfast.” Is that generally true of M&As? Please explain.

Whitaker: Yes, and there is no such thing as “adopting common culture” which sounds great as an integration objective but is completely unrealistic. Legacy cultures are difficult to fully eradicate, and the reality is you end up having a diaspora of cultures based on your acquisition history. Leaders who set a strong vision and business goals can help align these legacy cultures and get folks all pointing in the right direction. Cultural integration efforts are an important part of managing M&A and requires detailed planning especially around communications and change management, and patience and consistency is most often the key to success.

Morris: In your opinion, which faces greater challenges during the M&A process: a company that acquires or one that is being acquired? Please explain.

Whitaker: The acquirer, as all of the pressure is on them to deliver the investment thesis and deal objectives. Make no doubt it is difficult and stressful for the target as well, but the acquirer is responsible for all of the pre-deal diligence, integration planning, and delivery of deal objectives.

Morris: Now please shift your attention to Cross-Border Mergers and Acquisitions. When and why did you decide to write it?

Whitaker: It is a lightly covered area in M&A, and with cross-border M&A activity increasing by double digits over the past few years, I thought practitioners could use a hands-on reference for the topic covering a wide range of legal, political, social and cultural topics. (as well as general best practices on a wide array of integration planning and execution topics).

Cross-border mergers and acquisitions (M&A) can be one of the most intense and chaotic periods a company will ever experience, and I thought readers could benefit from the collective experience of my fellow authors to help then navigate this challenge.

Morris: Were there any head-snapping revelations while writing it? Please explain.

Whitaker: I was thoroughly amazed at the breadth and depth of subject matter coverage by my contributing authors…we exceeding out planned page count by nearly 40%! Their expertise on virtually every topic covering the M&A lifecycle makes the book an extremely helpful reference for any M&A practitioner.

Also, the authors collectively cover 9 countries where the majority of M&A activity occurs today, so there’s no country specific bias which means the book can be useful to M&A practitioners across the world.

Morris: What are the greatest benefits of the book to leaders in companies that are acquirers?

Whitaker: Primarily by giving them a resource for helping them:

o Confidently lead full life cycle transactions by identifying, understanding, and mitigating cross-border challenges
o Effectively deliver work streams and tasks with internationally proven tools and methodologies
o Maximize synergies by establishing robust governance and integration playbooks
o Achieve sustainable results with culture-building insights and action

Morris: In your opinion, what is the most common reason that most M&As (both domestic and foreign) either fail or fall short of original expectations?

Whitaker: Insufficient time and resources dedicated to planning and executing the integration. It’s the number one reason cited for failure in almost every study you see. People tend to get started to late or “underman” the effort, which hobbles the integration work out of the gate and makes is difficult to achieve success.

Morris: For those who have not as yet read the book, please suggest what you view as [begin italics] the most important point [end italics] or [begin italics] key take-away [end italics] with regard to each of these subjects.

First, factors that have the greatest influence when deciding whether or not to become involved in a cross-border deal

Whitaker: Legal, social political hurdles to close a deal. For examples, there are very stringent requirements in parts of Europe relative to “work councils” (similar to Unions in the US), and which require more time and attention to navigate. The chapters included in section 1 on the book go into great detail on some of these subjects.

Morris: Understanding corporate versus country cultures

Whitaker: As readers will discover Chapter 7 and 8-both are equally important and need to be calibrated for any cross-border transaction. Chapter 7 on The Role of Culture in Cross-Border M&A by contributing author Christophe Van Gampelaere does a great job of detailing all of these nuances, including:

o The importance of culture in an M&A environment
o How cultural awareness will improve deal success
o Making distinction between various kinds of culture: global, local culture, corporate, innovative culture
o How to create cultural awareness in deal teams
o How to integrate cultural elements in the deal strategy

Morris: The unique challenges of leadership during the M&A process

Whitaker: Without strong leadership, the anxiety caused by M&A activities can overwhelm both the acquiring and target companies, and erode productivity and employee engagement.

Leadership “voids” during M&A events can negatively impact momentum and destroy value. And worse, it can permanently hobble a “newco” right out of the gate. Your leadership “posture” during an M&A event should be a carefully planned and coordinated to avoid unexpected results and issues.

Morris: The greatest challenges during post-merger integration

Whitaker: A lot is dependent on the transaction type and industry, but typical areas requiring a good deal of effort for most any deal include IT infrastructure integration and employee and customer retention.

Morris: There were ten contributors to the book. Of all that you learned from them, what do you think will prove to be most valuable to you and your firm in months and years to come? Please explain.

Whitaker: Our collective experience with more than 250 transactions across dozens of industries really comes through when you read the entire book. We can cover any topic related to cross-border M&A and help people with this difficult task no matter where they are located.

Morris: For more than 30 years, it has been my great pleasure as well as privilege to work closely with the owner/CEOs of hundreds of small companies, those with $20-million or less in annual sales. In your opinion, of all the material you provide in Cross-Border Mergers and Acquisitions, which do you think will be of greatest value to leaders in small companies? Please explain.

Whitaker: In my experience small deals are just as challenging as large ones, as integration work is deal size and industry agnostic —meaning you need to do all of the basic things well to deliver value and make your acquisition successful. The book will provide companies with integration planning and execution essentials that can be applied to any size company, and across dozens of industries.

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Scott cordially invites you to check out the resources at these websites:

The Global PMI Partners website link

His Amazon link

His LinkedIn link

His Wiley link

 

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