Strategy & Organisational Change
COLLABORATING ON WICKED PROBLEMS
A COMMON PURPOSE
Global challenges demand flexible partnerships, not perfect plans
by Jochem Hummel
will apply those once the deal is complete and be less likely to engage in opportunistic behaviour. Companies targeting M&A deals can demonstrate these qualities by ensuring their own boards are diverse and independent, being transparent about executive compensation packages, and other ethical business practices. High environmental scores – which gain the most media attention – may help acquiring firms to be seen as better prepared for a world facing more climate change regulations. Firms can demonstrate their environmental commitment by shifting to renewable energy sources and improving
Force on Climate-related Financial Disclosures and the Carbon Disclosure Project. Once a target is happy with these external factors, then the negotiation tends to move to social aspects – especially what happens to employees. This can drag out the negotiations if there is a lower social score, which often reduces trust. Target companies are frequently privately owned, so some employees may have options, as well as pensions and salaries. The quicker these negotiations can be resolved, the faster and cheaper the deal can be done. A track record for ensuring consumer safety and fair labour conditions, investing in workforce development, and supporting community social impact initiatives can strengthen a company’s image as a worthy suitor that honours its social commitments. However, social scores on their
own are not as relevant in deal completion. Social performance had a significant positive effect on deal completion until 2015, after which it was perhaps eclipsed by environmental scores. Therefore, strong social values should be seen as a valuable addition to good governance and environmental sustainability, rather than a substitute for them. By understanding this wide range of factors that make an acquisition more attractive to a target company, multinationals can increase the likelihood of being seen as a worthy suitor and enjoy the benefits when it comes to completing M&A deals efficiently.
Improve M&A outcomes with Mergers and Acquisitions: How to Maximise Success.
energy efficiency. They can also set
goals to reduce their emissions and adopt reporting frameworks such as the Task
Sustainable Development Goals
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wbs.ac.uk | Warwick Business School
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