Strategy is one of the most powerful drivers of growth for middle market companies, accounting for nearly 15% of the growth of the average middle market company. Strategy helps companies define where to compete, what resources they need, and what priorities they set. Strategy guides their choices about what to do (and not to do) to achieve their aims.
The National Center for the Middle Market, based at Ohio State University, surveyed 400 active financial decision makers from middle market businesses across a range of industries and geographies to learn more about companies’ specific actions and attitudes around strategy. Respondents completed a 25-minute, self-administered online survey in August, 2018.
By looking at attitudes toward strategy, approaches to strategic planning, the challenges companies face in developing and executing strategy, three components of strategy have been shown to be critical to middle market growth —definition, development process, and execution—that work together to enable companies to more rapidly realize their corporate objectives and growth goals.
- A well-defined strategy. Companies that can clearly define their strategy are better able to articulate the value to customers, and these companies grow twice as fast as companies that can’t. The strategy should clearly describe where the company competes, what it sells, how it wins and defends markets, and how it sets itself apart from the competition. The more succinct the strategy is, the easier buy-in from all stakeholders will be, including employees, customers, suppliers and partners. Buy-in is essential for the company to succeed.
- A robust and inclusive process for formulating strategy. The process doesn’t need to be highly formalized. It does need to factor in a wide range of inputs including ideas from employees across and throughout the organization. It needs to include external inputs like customer and industry trends, and the latest strategy and management thinking.
- An execution process that engages the entire company. Goals, incentives, and key performance indicators are all aligned with the strategy so that employees at all levels understand the strategy and how what they do connects to the strategy and goals. Now employees can align their actions and behavior with the strategy for better execution and greater success.
Companies with well-defined strategies report year-over-year revenue growth that is 26% higher than the growth of companies with less-defined strategies. To find out more, see https://www.middlemarketcenter.org/middle-market-research-reports-full-research/strategic-planning-for-growth.
With a failure rate of over 70%, M&A is in need of improvement!
Although M&A is often spoken of as a transaction, our research shows that many causes of M&A failure can be traced to a lack of preparation before the transaction including integration planning that impact both buyers and sellers. Preparing a company to acquire or be sold is a process that typically takes 1-3 years for both the buyer and seller.
For sellers, the proper planning results in as much as a 72% additional valuation.
For buyers, appropriate strategy, target identification and characterization (due diligence) and integration planning helps ensure a successful acquisition and integration that fulfills the buyer’s objectives.
We offer a systematic approach that can include all areas of the company for gap assessment and solution (sellers) and strategy/due diligence (buyers). We work with buyers and sellers throughout all phases of M&A, but we find that appropriate preparation is key for success.
Here’s the link to the broadcast
It was a great experience to be part of a panel discussion in front of a live TV audience. The recorded half hour show has since been broadcast numerous times. Kelly Leonard, the host and panel moderator, has several years of experience on SBN, and she kept the conversation moving and lively. My co-panelists, Billy Duffy, an M&T banker with a focus on M&A, and Will Ferguson, a business broker based in Baltimore, did a great job. I provided panel questions to Kelly and we all decided who would initially answer each question. Planning these events is important, but the conversation took unexpected turns which made it fun, along with the audience questions. The key is to make it interesting and informative for the audience, and based on the response during and afterwards, we accomplished that goal. Laurie Wiggins, CEO, Byond
Small Business M&A was the focus of the Small Business Network (SBN) shown on Montgomery County Public TV. Byond’s Laurie Wiggins was a panelist.
Click for details and watch for the video coming soon.
ERM in a Digital Economy Conference, New York City, 5-17-2018. Thanks to James Bone and ACL for asking us to participate in their Data, Decision Support & Board Governance: Value Proposition panel discussion. We were able to bring the broader company perspective particularly as it influences M&A.
This event was held on February 28th. The related podcast of the event is provided below
This event was held on February 27th. The related video from the in-person event is provided below, including the interactive discussion about the trends and opportunities in the Middle Market M&A.
Details From the Meeting
Thanks everyone who attended this discussion. It was a pleasure and honor to lead this. I really enjoyed the conversation with the audience.
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