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Alula: A CLG Company

Private Equity

 

Maximize deal value to avoid the post-merger and acquisition growth value gap

Research shows 70% of merger and acquisitions (M&A) deals will fail to achieve their intended value creation. In fact, most become stagnant, quickly exposing a Growth Value Gap.

Why does this happen? 90% of CEOs say that “financial performance post-M&A is fully tied to culture.” 1Recent study by Society of Human Resources Management (SHRM) Overlooking the acquired organization’s culture and failing to integrate its employees for maximum deal value often has dire results:

  • Poor communication
  • Unclear goals and objectives
  • Strategic misalignment
  • Uncertain roles and responsibilities
  • Under-optimized organization structure
  • Lack of accountability
  • Uninformed decision-making
  • Process drift
  • Team burnout
  • Unmet financial goals
  • Misaligned values
  • Employee or management resistance to change
  • Engagement and talent loss

For maximum deal value, address culture before the merger or investment, not after.

When Private Equity (PE) firms investigate culture as part of their due diligence process, they protect financial performance and valuations – avoiding the Growth Value Gap that plagues 70% of M&A deals. Adding the culture perspective to financial and legal perspectives lends 3-D clarity to maximum and long-term deal value.

How Well and How Soon Are You Understanding Culture?

ALULA’s Acquisition Growth Index is based on a proprietary formula that calculates the ROI potential of Pre-Deal and Early Post-Deal Culture Due Diligence as well as Post-Deal Culture Integration. Scoring a deal on this index enables organizations to understand culture well enough to anticipate and avoid gaps in value creation.

Acquisition Growth Index

Where does your deal fall on this index?

ALULA’s proprietary formula uses real data to score deals. The scores serve as a robust foundation for understanding culture and maximizing value.

How We Help Achieve Full Deal Value

ALULA brings to the world of M&A almost three decades of experience applying the science of behavior to three core business disciplines: change, leadership, and performance. When our experts apply repeatable, evidence-based, data-driven processes to keep an organization’s goals on track, outcomes include:

  • effective use of growth capital to capture market share
  • improved managerial oversight and leadership development
  • active transfer of new skills, knowledge, and expertise
  • expanded value generation across teams and operations
  • higher workforce performance and engagement
  • consistent talent retention and growth
  • measurable integration of company values

The current upsurge of M&As and high risk of failure mean that PE firms and their portfolio companies need to quickly establish their operating model and formalize a process for continuously monitoring performance, organizational and talent development, and change management. After reviewing a deal’s complimentary score on our Acquisition Growth Index, here’s what you can expect from an ALULA investment:

PRE-DEAL AND EARLY POST-DEAL Culture Due Diligence

Post-Deal Culture Integration for maximizing performance and positive workforce engagement

Value Creation is Not Linear

Deal value has the most ROI when the multiple and concurrent changes inherent to M&A are executed rather than endured. We use our Make-it® Model customize Pre-Deal and Early Post-Deal Culture Due Diligence as well as Post-Deal Culture Integration. The model has a cyclical structure that connects the execution of every change to the big picture: maximum and long-term deal value.

ALULA's Make-It Model

Make-it® Possible:

Leader Alignment - Senior leaders across the organization are aligned on goals and readied to proceed with leading change

Make-it® Clear:

Organization Alignment – The organization is aligned on the case for change as well as the change roadmap

Make-it® Real:

Organization is Ready – The organization is ready to “go-live”

Make-it® Happen:

Organization is Changing – Business results are being achieved through the right behaviors

Make-it® Last:

Sustainable Change – Barriers to sustainability are removed, continuous improvement initiated, and management and HR systems adjusted to reinforce changes

Keep Modeling Value into the Future

When you commit to Pre-Deal and Early Post-Deal Culture Due Diligence as well as Post-Deal Culture Integration, you can trust your portfolio companies to handle multiple and concurrent changes – the ones that maximize deal value and continually align with both investor ROI and enterprise goals. Here are a few examples of our clients’ results.

Post-Deal Culture Integration

For a health-environment-safety equipment manufacturer, ALULA helped a post-M&A integration exceed targeted results and develop the future CEO

Challenge

  • Close the value gap threatened by the merged organization’s two diverse cultures while maintaining aggressive growth

Solution

  • Five-and-Five Integration tool and performance coaching enabled the organization to integrate and grow on time

Results

  • Most successful merger in the client’s history
  • Financial targets exceeded
  • Future CEO prepared to sustain results

Pre-Deal and Early Post-Deal Culture Due Diligence

For a newly formed bank, ALULA helped leaders integrate two very different cultures and achieve targeted results

Challenge

  • Close the value gap of two merging banks with clashing cultures, change resistance, high turnover, and customer confusion

Solution

  • Enhancement program enabled key leaders to define and implement the actions critical to rapid closure the value gap

Results

  • Retention of high-performing talent
  • Cost savings through minimized turnover
  • Sustained leadership alignment based on operating philosophy
  • Avoidance of financial decline
Ken Wagner, Alula

Contact the Expert

Ken Wagner, Ph.D.

General Enterprise Practice Lead, Director

Let's Talk

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Why Behavior is Important to Achieving Business Results

We’re With You, Every Step of the Way

ALULA

Using long-term deal value as a starting point, ALULA can tailor a Culture Due Diligence and Integration solution for your firm’s unique situation and desired outcome. ALULA will meet you where you are, understand your objectives, develop a plan, and—through consulting and coaching—help execute and accelerate the adoption of sustainable change.

We commit to uplifting your enterprise and its leaders. We remain accountable to you on your journey, and our utmost goal is to prepare your organization’s leaders for the value creation that’s built on truly understanding and transforming culture.

We’re invested in your success—as a leader, and as a business. We strive to help you and your organization achieve your goals and create value in a positive, fulfilling, and effective way.