Maximize M&A Value Creation and Build a Blueprint for M&A Success through
Accelerated Strategic Shifts, Talent Retention, and Digital Capabilities
The pandemic caused multiple economic changes, severely impacting different sectors such as the real estate industry. Mergers & acquisitions were severely eroded. Many corporates are hanging on the line. There is a need to balance the new opportunities for growth and the arising uncertainties.
Finding this equilibrium seems to be the only solution for survival. Many organizations are thriving by utilizing the real estate industry drivers and trends that are reshaping the sector. The commercial real estate industry has witnessed different changes after the pandemic’s impact. Various asset classes and subsectors were affected differently.
For instance, the pandemic’s negative impact severely affected the offices, restaurants, hotels, and retails. On the other hand, warehouses, multifamily, data centers, grocery stores, healthcare, and cell towers weren’t as affected compared to the former.
The short-term observations pointed out that commercial real estate owners faced cost pressures because of softening operating fundamentals (increasing vacancy rates, higher operating costs, and rental collection declines) from implementing additional health and safety measures.
In the long run, the pandemic has affected people’s lifestyles; how and where people live, play, and work. This might dramatically reframe the future of specific property sectors. Nonetheless, particular strategies and measures should help the commercial real estate industry revive and ultimately survive.
So how is this possible?
A Blueprint for M&A Success
Programmatic merges & acquisitions can assist companies in building resiliency. However, such an approach to deal-making requires a reliable game plan to guide opportunistic deal evaluation and proactive deal sourcing.
Large M&A grab the biggest headlines, although executives should also pay attention to the small deals. Pursuing these smaller transactions as part of a systematic and deliberate M&A program tends to yield good returns in the long run, involving comparatively low risks. A company’s ability to successfully manage these small deals might be the primary factor in its ability to withstand any economic shocks.
Maximizing merges & acquisitions value creation is possible through;
A company is only as good as the people in it. This is a critical factor during a merger integration. A deal might give rise to an opportunity to upgrade talent in the organization. In some cases, the major reason for an acquisition is to gain access to highly skilled employees. On the other hand, mismanaging talent issues could seriously affect your success even in a relatively straightforward transaction.
Organizations undergoing a merger should tackle two core challenges around talent;
- How to retain employees vital to the combined performance of the company
- How to manage employees’ appointment and selection process in a manner that will cause the least anxiety and disruptions.
Comprehensive management and preparation of these processes are essential to achieving a merger’s goals.
Even though digital capabilities aren’t the centerpiece of an M&A deal, they can still provide excellent deal value with integration planning and the right due diligence. The digital revolution is making changes in the dynamics of merger & acquisition transactions.
Information Technology represented a cost that required controlling and managing as two organizations merged. Today, digital capabilities and IT are the driving force behind M&A transactions. Digital capabilities can provide a good source of additional deal value, specifically for legacy companies struggling to catch up to the more technologically entrenched & advanced players and digital natives in the respective markets.
Accelerated Strategy Shifts
Shifting your strategies is another option to maximize value creation in M&A. Some of the options to look out for include;
- Potential opportunities for purchasing distressed assets
- Migration trends such as urban exodus
- Balancing portfolio for risk mitigation
- Reevaluating commercial real estate asset valuation propositions.