Mergers and acquisitions (M&A) are always an option when developing and executing corporate strategy. They provide the means to quickly increase market share or expand technology that could otherwise take years to develop internally.
As an EHS/S (environmental, health, safety, and sustainability) professional or executive, how well do you support M&A activities? More likely than not, you cover the basics of conducting phase I or II assessments, determining basic regulatory compliance, as well as characterizing the overall EHS/S risk profile of the entity under consideration.
But have you or your leadership examined whether the EHS/S information being collected is enough and whether a change in the M&A assessment practice could increase the chances of a successful M&A event? An article in the current issue of the Harvard Business Review (March 2011) suggests not.
The New M&A Playbook reports that companies spend more than $2 trillion a year on acquisitions, and that ultimately, the failure rate is a stunning 70 to 90 percent. The innovative new theory presented in this article is a must-read for EHS/S professionals and executives in companies that are active with M&As. One piece of the theory is having clarity on how the two business models will mesh and how the “meshing” will impact your growth trajectory.
From an EHS/S perspective, will you assess the EHS/S strategy/model of the other firm? If you will, how will you do it? How will you report it and what are the metrics? The second issue to address is how well you understand these same issues in your own company, and whether or not you can forecast how well the EHS/S functions will mesh/integrate. If the entity is being pursued because of its superior business model, has consideration been made about how integral EHS/S is to the model? And if that is the case, how well will you be able to integrate your EHS/S function into theirs if it is better?
Learn more about how you can strengthen your EHS/S contribution to M&A activities.
© Redinger EHS, Inc. (2010)