Tuesday, September 29, 2009

Why 70% of Acquisitions Fail

For forty years or more it has been known that 60% of acquisitions fail; some put the failure rate as high as 80%. The problem does not lie with the due diligence. By and large they are carefully and professionally done.

Rather, it resides in what the due diligence does not address at all: The root cause, the origin, the driver, of all performance and results, the Operating Dynamic of the company, its very Will to Compete. This is the stuff success (or failure) is made of; the stuff on which an acquisition should be based; the stuff with which a merger should be carried out. Yet is it almost never measured.

Why this is so, is simple enough: It is widely believed that the operating dynamic is something not measurable, something mystical, something almost spiritual; perhaps also because looking at the exposed soul of a company might be embarrassing.

But the operating dynamic is measurable - in great detail. And its measures PREDICT performance long before that shows in the financials. An article on this, first published in the CEO Refresher, may be found at The Corporate Polygraph. Another article, The Black Hole in the Due Diligence Audit, will appear in the October 2009 edition of Corporate Finance Review -

If you do not subscribe to
CFR and would like to see the article please let us know.

Tuesday, September 01, 2009

The Foundations of Recovery - I

There are just six critical functions that determine corporate performance. They constitute a company's Operating Dynamic .. They encompass its inherent Will to Compete .. They are entirely within the control of management.

Improving them by a mere 20% increases the bottom line by 40%*, something no cutback, no strategy can do.

During the intense 1980-82 recession we created a process that:
  1. Provides hard measures for these critical functions and presents them as a Balance Sheet and P&L; this was never before possible.
  2. Enables CEO's to trigger serious improvements in them - and on their companies' bottom lines.
It has worked in every downturn (and upturn) since,
in large companies and small, in for-profits, and not-for-profits, even government. It is fast. It is economical. It is non-intrusive.

It is true corporate mobilization. It leaves your company, not only more profitable, but stronger, more aggressive, ready for the recovery.

I would like to tell you about this. Would it be possible for your assistant to arrange a time for us to talk? In this recession there is probably nothing you can do that will bring greater or faster results.