Change is the new normal - Euca Consulting

Short term pain for long term gain

Over the last two decades, there has been a worldwide decline in the number of publicly listed companies, accompanied by a rapid growth in private organisations that exist unburdened by the reporting, compliance and complicated shareholder relationships that come with the territory of listed companies.

According to Harvard Law School Forum on Corporate Governance, the number of public firms in the US has approximately halved between 1997 and 2020, with the number of private equity backed firms in the US alone doubling between 2006 and 2017.

The move away from the public company structure has not all been due to PE activity. An October 2021 article by Vartika Gupta, Tim Koller, and Peter Stumpner of McKinsey identifies consolidation through M&A activity and structural reform in banking, industrials and technology as key drivers of the change.

The trend of private capital seeking to outperform public market returns will continue meaning that increasing M&A activity will mean that more and more executive teams will need to navigate the disruption of acquisition at some point in their careers.

While this is an industry-wide trend, most executives may only experience a company merger, or the acquisition and integration of a subsidiary once or twice across a career.

How then is an executive who spends their days rightly focused on growth, operational excellence and leading and developing their people become an expert in navigating the huge structural change wrought by a company acquisition?

Delivering the necessary post-acquisition alignment needed to realise the benefits in the investment case requires focused effort over a finite period. Throwing that project-scale work onto already stretched executive teams often doesn’t work, which is where the focused engagement of transition specialists can add real value.

Matching short-term costs of specialist consultants with the short-term activity of managing alignment and cost reduction programs serves two key purposes.

It contains the cost of post-acquisition change activities to a quantifiable program of work…

Too often, this cost reduction and cost containment strategy is diluted by the business model of large consultancies who work hard to get in and work harder to stay there. There is no value in simply replacing one set of costs with another, so selecting a specialist partner who sees their role as targeted and finite with very clear outcomes to achieve in a defined timeline helps to minimise cost.
It allows executive teams to remain focused on the critical tasks of growth and customer acquisition.

Like anything, practice makes perfect, so providing executive teams with the space to focus on their core tasks of company growth and strategy execution helps to work the problem from both ends. Let the teams who are committed to the long-term growth of the company work that strategy without distraction and allow the specialists who live the challenge of operational alignment and cost reduction work to deliver the planned business synergies.

Change is here to stay, and the trend toward company consolidation and private ownership will mean more and more executive teams will be faced with the challenge of integrating different company structures, capabilities and cultures into a cohesive whole. It is a fraught process, but it is possible to tilt the odds of success in your favour with targeted specialist help

Company acquisition is hard work but if done right, the pain is temporary, but the gain is permanent.

The Euca Difference

Euca is a team of senior practitioners who have direct experience of managing acquisitions and divestments in trade and Private Equity environments.

We focus on planning, leading and executing the necessary changes needed to maintain value, and keep critical resources focused on the core tasks of delivering on growth.

We are a small, specialist team which sets us apart from Big Four style firms with a land and expand business model. We believe that value is maximised when the transition process and cost is finite.