Case Study: Executive Team Capability Review in a M&A Context

June 21, 2018
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By Peter Tulau, AltoPartners Australia Director

This article was first published on Peter Tulau’s LinkedIn Pulse

A major French construction company was in the process of acquiring a very successful and substantial, family owned, Australian construction company. They engaged AltoPartners Australia to conduct an executive team capability review. We were excited by the maturity and sophistication of the acquirer and their desire to run this process as executive team reviews are a perennially underutilised, but very effective component of an overall risk mitigation strategy in a M&A context.

Executive Review Process

The project included direct executive assessment using the Saville suite of tools and substantial interviewing with the target’s executive team. Saville is the acquirers preferred assessment tool globally, so the information released from this review aligned with their interpretative framework and general approach to organisational evaluation and transition. Each executive underwent temperament profiling, aptitude assessment and an examination of their motives and work preferences. The primary objectives of the review were to both identify and comment on the executive team’s capability and expectations, but also to place this information in the context of the transaction and make recommendations which facilitated a high quality, productive engagement.

Interviewing and questionnaires sought to:

  • Uncover the nature of the targets culture, values, strategy and operations.

  • Explore the way autonomy, accountability and performance worked in the business, as this is where issues will emerge down the track if things are misaligned or misunderstood.

  • Understand the leadership team’s views on their sources of competitive advantage, the potential threats to this competitive advantage and their views on the approach the acquirer should adopt both pre and post transaction.

  • Determine, through direct interviews, each executive’s leadership style and their views on how they would like the transaction to unfold for them both professionally and personally. Additionally, give the leaders the ability to articulate their thoughts on whether they felt there were other areas where their contribution could be further enhanced.

Speaking generally, this last line of questioning is important in most, if not all, M&A situations as the transaction is a cusp moment which creates considerable opportunities for positive change. Some executives may feel underutilised and keen to evolve, others out of their depth and keen to be reassigned. These thoughts can be realistic or unrealistic and need to be considered and incorporated into the broader transition plan. Some may see it as an opportunity to depart and others may simply want to maintain the status quo. It is important to find the leverage points. Saboteurs can be dealt with and champions can be utilised to build bridges between the organisations.

Key Outcomes and Findings

The target had successfully forged a strong brand in the market by operating as a values driven organisation over an extended period subsequently building a consistent, positive culture. There was congruence across the executive group when describing the business and they were proud to belong. There was a mood in the executive group to embrace the forthcoming transaction and a level of belief that the acquirer understood their nuances, but there was also a fear of impending corporate bureaucracy creating time lags and inefficiency, misalignment of the strategy around desired rates of growth and of becoming a KPI driven organisation which drives behaviour in the wrong direction and fractures culture.

The executive team review summary and recommendations focussed on culture, values, strategy, governance, accountability, business fundamentals, leadership and the future. The review provided both hard data at the individual level but also some innovation and insights with aggregated data presented as a behavioural heat map across the executive group and the primary behavioural clusters. This method of data presentation enabled the acquirer to get a spatial representation of executive orientation and identify themes and patterns and plan accordingly.

The transaction has recently completed, and we believe the review helped mitigate the human capital side of transaction risk and facilitate a positive outcome for both parties. This type of review has broad application including M&A, pre – IPO or restructure and for general executive team optimisation purposes.

Peter Tulau; Director, AltoPartners Australa, p.tulau@altopartners.com.au, 0490 460 492