Recently, the Business Roundtable publicly embraced Conscious Capitalism’s fourth tenet: a Multi-Stakeholder perspective.
That tenet espouses the notion that businesses need to apply “systems” thinking to their decision-making process, understanding and equally weighing the impact of their strategic decisions on a whole range of stakeholders, not just investors. That includes employees, their families, business partners, the public, the environment, the local community, and even competitors.
Perhaps no decision is more strategic or impactful to stakeholders than the decision to sell or merge a company. And often, that decision is made with the guidance of experts who have only the founder or investors’ interests in mind. Most M&A deals aim to maximize shareholder return. Huge amounts of integration effort are focused on financials, products and systems while little or no attention is paid to culture, community or other interests. And yet, ironically, the data shows that 50-80% of M&A transactions fail to live up to investor expectations.
At BrandFoundations, much of our work improving brand and culture takes place in post M&A situations and we’ve seen first-hand the negative impact on those other stakeholders: an internal culture that turns sour, partners distancing themselves from the chaos, neglected customers heading for the exits… all of which undermines the brand.
We wondered what the Business Roundtable’s decision to embrace a multi-stakeholder perspective might mean for the future of M&A. So, in partnership with Conscious Capitalism NYC, and our venue partner Primary, we hosted an event called “Conscious Transactions” that featured a panel of two M&A facilitators and two conscious CEOs who had recently sold their businesses:
Moderator: Michael Andrews, Founder of Hawkstone Capital – Hawkstone Capital is a Private Investment firm that brings together independent operating executives, direct investment investors, and founders who are interested in a liquidity event that incorporates the interests of the business, the owner’s legacy and employees.
Panelist: Jay Roberts, President and Chief Executive Officer at Cancer Genetics – Jay has participated in more than 50 transactions in his career: as a founder, an investor and an operating partner developing a unique sense of how to maximize value and outcomes for all stakeholders.
Panelist: William Vogelgesang CEO Co-Founder of EPOCH Pi – William W. Vogelgesang is a co-founder of EPOCH Pi, an investment banking company serving purpose-based or impact companies: businesses that exist to provide financial as well as a social return while endeavoring to create value for all stakeholders.
Panelist: Gavin Watson, Former Owner, Watson, Inc. – Gavin is a member of the board of Conscious Capitalism CT and brings a unique perspective to the conversation having recently sold his family-owned business, Watson Inc. Gavin long practiced conscious business principles at Watson and has first-hand experience in what it is like to exit a conscious business.
The panel’s conversation ranged across a variety of topics and included a deep dive into the role of cultural due diligence and its importance to both sides in a transaction. Specifically, acquirers need to better understand their own culture, and that of a new acquisition, in order to assess impact and best strategies for integration. In addition, sellers need to meet with the leadership and staff of an acquiring company to be sure they know what whether they will be a fit within that culture as well.
You can view a full recording of the panel discussion and Q&A below or at: https://youtu.be/hOL8UCWZ9IU