LDS On: Mergers & Acquisitions in the Age of Uncertainty

In this episode of “LDS On,” CEO Mimi Brooks examines how the booming 2021 M&A marketplace offers companies a unique opportunity to create exponential value with a new foundational core far beyond the value of integrated or consolidated businesses. Brooks explains how this includes setting an inspiring strategy, building ecosystems as new-age value networks, creating platforms that connect users everywhere, and delivering experiences that employees, partners, and customers crave.

Transcript

Welcome to the eighth video in a series of LDS thought leadership dedicated to the discussion of transformation management. In each bi-weekly video, we’ll address a topic of strategic interest to business leaders who are guiding their organizations through transformative change.

In this video, I’ll focus on the rise of mergers and acquisitions in building post-COVID business models. Being fit for future in this second wave of the Fourth Industrial Revolution means not only finding the right capabilities to remain competitive, but also having a growth strategy that anticipates massive, and at times sudden, disruption in your chosen marketplace. So, this is “LDS On: Mergers and Acquisitions in the Age of Uncertainty.” Let’s get started.

As companies assess their future, many are seeing a fast-changing marketplace driven by new dynamics. High valuations are being levied for companies with game-changing digital competencies while industry sectors continue to blur and digital transformation accelerates. The next twelve months will be busy ones for mergers and acquisitions, as many companies have accumulated massive war chests of cash and marketable securities and deal making may be the best, and fastest, way to fill urgent gaps in the skills, resources, and technologies needed to create new value.

Underlying these acquisition growth strategies is the pursuit of value beyond the balance sheet and hard assets. The new rules of value creation include access to talent and critical intangibles such as reputation, trust, and sustaining key relationships among a wide group of stakeholders. Acquisitions that advance environmental commitments and outcomes, contribute positively to societal impact, or inspire the human element to innovate in the workplace of the future are among the key drivers of M&A activity.

M&As, then, offer a unique opportunity to create exponential value with a new foundational core. These include setting an inspiring strategy, fit for future with high purpose; building ecosystems as new-age value networks; creating platforms that connect users everywhere; and delivering experiences that employees, partners, and customers crave.

Let’s look at each of these in a bit more detail.

First, setting an inspiring strategy with high purpose based on doing good. Today, more is expected of companies who benefit from the policies, labor, local communities, and natural resources of the countries where they do business. In addition to delivering total shareholder returns, attending to the Total Societal Impact, or TSI, is another model where good for the business and good for society can be assessed. TSI challenges companies to consider their strategy as to its “total benefit to society from a company’s products, services, operations, core capabilities, and activities.”

Second, building ecosystems as new-age value networks to create and deliver innovative and differentiating solutions and outcomes. As industries move toward servitization, M&As can be the perfect opportunity to consider the value of these flexible networks of partners – value webs, if you will, to unlock new value and create needed resiliency. Companies in all industries will participate in these ecosystems and extend them to employees and workers in the context of new work practices supported by digital capabilities.

Third, creating platforms that connect users everywhere and drive growth by unlocking new data resources to create new products, services, and capabilities. Data is now the new raw material most valued by companies. M&As will be valued as to their data assets and the potential to extend these critical resources to fuel digital transformation while feeding the highly personalized and dynamic solutions and platforms that delight customers. Internally, globalized data flows enable workers located over a wide geography and in virtual work settings to readily collaborate and problem solve, monitor global operations, and predict future work and performance.

Lastly, delivering experiences that employees, partners, and customers crave. Experiences are the “street-level” view of all of these, critical for newly formed businesses as they are the view that people have of the business. Disconnects at the experience level – such as espousing business integration while people experience fragmentation, or asking leaders to rise to new roles while they lack basic business insights, and so on – these all degrade the firm’s credibility and value proposition in the minds of the people who need to most believe in it.

In summary, global M&A activity will escalate exponentially over the coming twelve months. Marketplace disruption will also intensify as the digital era rapidly evolves. Companies across a broad spectrum of industries will rely on mergers and acquisitions in order to keep pace with the rate of change. Intangibles such as reputation, trust, and sustaining key relationships will assume greater importance. Long-term value will be driven by commitment to factors like the environment, society, and governance. We see M&As moving well beyond business integration to embrace high-purpose business strategy, platform creation, ecosystem development, and the provisioning of customer and worker experiences that far exceed expectations.

Essentially, M&As are paving the way to a return to a robust economy in the post-COVID, forever accelerated, age of uncertainty.

Thanks for watching. You can feel free to interact with us on any of the LDS channels shown below. We hope to see you at another “LDS On” discussion in the future. Until then, stay safe.