World Monitor Magazine WM_Energy_ 2019_web | Page 54

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an extension of your corporate strategy instead of a sudden
opportunity. Companies that invest time in strategy, follow
that course, and avoid chasing a shiny object just because it’s
available will have a much better path to success.” Unsurprisingly (given the clear importance of an execution
blueprint), our research made clear that experienced sellers
that undertake more frequent disposals are most likely to
create value for their business.
The director of M&A at a Canadian energy business interviewed
for PwC’s research provided a case in point: “We decided last
year that we needed to be a more dynamic organization with
more advanced technology. The business we bought provided
us not only an immediate technology upgrade but also a
pipeline of advances for the next five years at the least.” What does this tell us? Deal makers with both a clear strategic
plan and an established execution blueprint are much more
likely to create value than opportunists.
value creation right from
the start.
2 Prioritize
Having an established value creation blueprint to guide
execution is also critical. Our research found that 98 percent
of deals that created value were carried out by acquirers that
used such a tool. Ruthless prioritization and tracking of the areas that will have
the most impact — in both value and potential barriers to
delivery — enable you to focus resources and hit the ground
running.
The survey findings provided strong backing for this approach
on the divestment side as well: Ninety-nine percent of
value-creating disposals were carried out by sellers with
an established execution blueprint, whereas 93 percent of
value-destroying deals had none. Sell-side due diligence is a
critical element of any plan: Ninety-two percent of successful
disposals included sell-side due diligence. Traditional 100-day planning is no longer enough. Acquirers
need to be ready with a comprehensive value creation plan
30 days before deal signing so that key assumptions can be
tested and validated through diligence, and so the plan can be
implemented straight away.
“We use a formal method to complete our divestments,” says
the director of M&A at a retail, consumer, and leisure company
in the U.K. “This involves formal considerations with specifics
that change according to the nature of the negotiations.”
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Important questions to ask: How can we lay the groundwork
ahead of acquisition? Post-deal, how will we deliver on our
targets in areas such as talent retention and revenue gains?
If we find we are not meeting those targets, why aren’t we,
and what can we do to get back on track?