One of the first things business owners learn about me is that I love strategy. I even put it in my core value proposition: helping companies grow through strategic mergers and acquisitions. I’ve written and spoken extensively about how an effective strategy can be a game-changer no matter where you are in your mergers and acquisitions (M&A) journey.
But I recently read an article excerpted from James Clear’s book Atomic Habits that is easily applicable to the work I do to help my clients develop winning M&A strategies. And perhaps more to the point: how strategy must be backed up by action to drive the results you want.
Motion versus Action in M&A
To start, I’ll borrow Clear’s distinction between motion and action. Clear defines motion as “planning, strategizing, and learning.” These activities are important and useful but don’t produce measurable outcomes on their own.
Action, on the other hand, does drive outcomes. If I Google adults’ recreational basketball teams in my area, Clear would call that motion. I’m moving toward joining that team. But if I actually show up to practice, that’s action because I’ve actually achieved something — a spot on the team.
The same applies to M&A. The time and effort we put into strategy is valuable and important. But the strategy itself isn’t closing deals. At some point, you need to act — to get into execution mode and turn all that planning into growth.
Easier said than done though, right? Through my work with business owners, I’ve noticed that there are five key roadblocks that keep many leaders from transitioning from motion to action. Here are those challenges, along with some tips to start executing more effectively.
5 Common Challenges & How To Solve Them
Challenge 1: Lack of Clear, Specific Goals
Many leaders pursue M&A to accelerate growth. The problem? Growth means something different to everyone and can be difficult to achieve without a well-defined “why.” For example: Do you want to grow your revenue? Your geographic footprint? The number of experts in your workforce? Your influence?
The takeaway here is that specificity matters. When leaders fail to clearly define why they’re leveraging M&A, it becomes difficult to focus their execution. This can lead to a cycle of stress and planning that’s difficult to break and ultimately keeps you from getting anything up on the scoreboard.
Adopt a strategic planning process. That may sound more like “motion,’ but it’s actually the basis of purposeful action. Gather your leaders and ask yourselves, “What are we really trying to do here?”
Once you’ve answered that question, you can create repeatable processes knowing that any deal that furthers your goal is a deal you want to make. That will quickly kick you out of planning mode and into the deal-making mode you want to be in.
Challenge 2: Analysis Paralysis
“Outcomes are a distraction. We want to focus on what we need to do to get the outcome. We don’t talk about winning the game, we talk about dominating the competition; again, it’s one play at a time.” – Nick Saban
Even with a strategic process in place, many leaders sweat over actually closing deals. They wonder if it’s the perfect deal and analyze the terms until they’ve effectively talked themselves out of signing that contract.
Though it’s true that the details matter, the pursuit of perfection is often inaction masquerading as high standards.. For that reason, excessive analysis almost always hinders progress and inhibits growth. You could also lose out on deals you should be making to your faster-moving competitors.
Leaders who struggle with analysis paralysis should develop a clear decision-making framework. When done well, this framework should narrow the field you have to analyze, increasing your confidence in the deals you make and reducing the time it takes to make them.
A good decision framework is built around business goals. It includes an outline of your dream deals and key characteristics to look for in target companies. You might also build templates to outline how you’ll discuss and ultimately decide whether a deal is a go. Slotting every potential deal into this framework makes M&A less of a guessing game and more of the systematic process it should be.
Challenge 3: Fear of Failure
What keeps CEOs and founders awake at night? Fear of failure. In fact, 90% of business leaders lose sleep over that very fear. The stakes can feel even higher in M&A, with million-dollar deals almost always in play.
But if you’re afraid of making mistakes, you’re probably also hesitating when it’s time to take action — second-guessing yourself, overanalyzing the deal, or seeking reassurance from your team. A little caution never hurt, as long as those nerves don’t cause you to miss out on some valuable M&A opportunities.
In M&A, you’re either growing or you’re dying. But the reality is that growth is hard and inevitably comes with some failure. That’s why a growth mindset is one of the most important qualities an M&A leader can have.
Leaders with a growth mindset know that rather than fearing failure, they should learn how to fail forward. Putting this mindset into practice is twofold: understanding that failure is a learning opportunity in disguise and proactively minimizing what those failures are. When you start thinking critically about the costs, benefits, and probabilities of certain outcomes, you discover the failures you don’t need to fear — and the ones you can take action to avoid.
Challenge 4: Ineffective Delegation
There’s this old adage in business that if you want something done right, you should do it yourself. But this mindset can cause real problems. After all, you’re only one person — a person leading a business, maybe raising a family, volunteering in your community, or seeing through any number of other commitments.
When you fail to delegate, you can quickly find yourself without the capacity and resources you need to execute — you won’t have enough time to do it all yourself, but you also won’t have an effective team to back you up. Leaders in either situation can easily get overwhelmed and make unnecessary mistakes, damaging any deals you have in progress and undermining those in your pipeline.
This ties back to your strategic plan. When you build it, take time to complete an organizational design exercise so that your current and future organizational chart aligns with your vision for growth. For example, if you already have a seasoned business development manager, they should own your prospecting process at the start and as it evolves.
Baking delegation into your strategic plan will stifle your urge to play M&A close to the vest. It’s also a key way to build trust. Give your team small tasks to start, then train them up until they’re confident tackling a bigger piece of the pie. They’ll feel validated, and you’ll feel confident delegating to them now and in the future.
Challenge 5: Lack of Accountability
Even the best leaders struggle with accountability. Many leaders think holding their team accountable is being the bad guy — leading to the fear that if they enforce boundaries with their team, top talent might jump ship.
But the reality is that your team is there to drive growth for your business. If you don’t set clear expectations and consequences for non-performance, you’re giving them little motivation to move beyond the planning stage and into execution. This can cause your M&A effort to flounder, your growth to stall, and, ironically, drive away your most talented team members.
As the leader, it’s your responsibility to get the most out of your team. Setting clear goals and making timely decisions is a subtle way to communicate your bias toward action. Those goals can also become the benchmarks your team rallies around.
Start by clearly communicating your expectations for your team, holding them accountable to those expectations, and then providing the coaching and support they need to perform against your goals. These are the simple — yet often overlooked — building blocks for a team that’s motivated to make deals happen.
Strategy as Action
I want to close by explaining what I see as the value of intentional action. Clear argues that you need both motion and action to drive results. I believe that to be true, but I also believe that action is the creating force, the spark that ignites new possibilities. And while planning helps us focus those actions, the strategy itself is not a creating mechanism. Action is. In that way, action and strategy aren’t opposites; they’re two deeply integrated sides of the same coin. And when these two sides are working in harmony, they’re building kaizen, a Japanese word for continuous improvement.
Once this continuous improvement flywheel starts spinning, strategy and action will work in concert to make deals happen. What does this look like in practice? When we strategize, we create an intentional approach to finding, evaluating, and closing high-value M&A deals. When we take action, we use our strategy to know when we should move on promising deals. And as more and more deals are made, we build a feedback loop, capturing our learnings and driving strategic adjustments as we move forward.
One concrete way to put this concept into practice is to take a programmatic approach to M&A. (Check out my blog post on this topic for more). At its core, a programmatic approach is essentially continuous improvement in action: catalyzing the link between strategy and action to produce the kaizen flywheel and yield greater and greater success.
Ready to get started?
Taking action is important, but it isn’t always easy. If you are interested in strengthening your existing M&A function, building a new one, or simply learning more about this critical part of your business plan, G-Spire can help you:
- Articulate a clear vision for growth
- Build a specific and actionable strategy roadmap
- Define and amplify your core competencies
- Develop disciplined processes and systems for M&A development & integration
- Codify learnings and create feedback loops to strengthen your program
About the G-Spire Group
The G-Spire Group helps entrepreneurs looking to grow through acquisition identify potential targets, negotiate with sellers and integrate the newly purchased business into their portfolio. To learn more, please visit: https://www.gspiregroup.com/