The M&A Leadership Importance vs. Effectiveness Continues to Grow

Over the last couple of years, when presenting at conferences on the topic of M&A leadership, I have taken the opportunity to ask two questions of the audience. These questions focus on their perspectives on the importance of leadership to M&A deal success and the effectiveness of their leaders in achieving deal success.

As the table below indicates, the gap has continued to grow wider. There are a number of possible explanations for this. First, as I have continued to share detailed insights on the importance of leadership in M&A deals, this has led to increasing knowledge and causing people to think about their current leadership situations pursuant to M&A deals. By raising their awareness on this critical topic, they perceive a growing gap. Second, this increasing gap aligns with recent CEO studies by major consulting firms that see an increasing gap in leadership within organizations.

What can companies do to mitigate their M&A leadership Importance vs. Effectiveness gap? These recommendations provide insights to help.

1.    Focus on leadership factors to deal success and not just culture factors.

Culture factors are important to deal success too, but not more important than the leadership factor. Cultural differences are successfully overcome by focusing on leadership factors in deals.

2.    Identify the leadership implications of the deal rationale and deal objectives.

The M&A leadership skill gap starts with understanding the leadership implications of the deal rationale and deal objectives at the individual, team, corporate function and business unit levels. For example, if integration of two sales and marketing functions to cross-sell each other’s products/solutions are a deal objective, then you might identify Knowledge of the Industry, Global Insights, and Fostering Teamwork as critical leadership skills that leaders will need in these functions.

By doing this analysis, companies are able to identify what leadership skills they need to support each deal objective and identify key leadership performance indicators (KLPI) to monitor for deal success.

3.    Create insights on acquirer and target leadership strengths and risk areas.

If companies are to close the gap, it starts with identifying your M&A leadership strengths and risk areas. By understanding what you have and don’t have, you will be able to leverage your leadership strengths and mitigate leadership risk areas to achieve deal success.

By doing this, you are able to identify what is important to your deal’s success and then have the ability to identify leaders that are more effective leaders.

Closing this M&A leadership importance vs. effectiveness gap is important. As the gap closes, companies should see great deal success in achieving identified deal objectives utilizing their most important asset…leadership.