Testing the Business Case for Mergers & Acquisitions with a Partnership

Last week I was reviewing Harvard Business Review articles for an upcoming award event, and one of them contained a surprising insight on success rates behind Mergers, and Acquisitions.

The papers I read was called Strategy in the Age of Superabundant Capital by Michael Mankins et al. (Harvard Business Review March-April edition). In this article the authors state that:

“Companies that expand via frequent, smaller deals over many years generate between 8.2% and 9.3% total annual shareholder returns. […as opposed to 4.4% annual total shareholder returns for “big bet” deals…]. And the more deals you do, the better you get at finding and closing the best ones.”

Screen Shot 2018-01-22 at 14.12.26
Exhibit from the Mankins et al. article

This statistic made me think:

If M&A deals with a smaller scope, and higher frequency already deliver a higher capital return, then what could de-risking an M&A deal by testing them out in a partnership experiment actually deliver?

Partnerships are quicker to set up than M&A deals, because they don’t require the formalisation of a new organisational entity, and they are less costly to execute because there’s no financial transaction involved between the partners.

On top of that the Business Model Canvas, and the Partnership Canvas combined, can increase the speed of execution, because the visual tooling creates alignment between partners more quickly, and clearly, and also accelerates iteration speed, and overall agility of the partnership experiments.

Can a partnership experiment thus be a good way to test the thesis behind M&A deals by making it easier to find out how they will play out, and lowering the risk associated with failure of the thesis? What are your thoughts here?

Check out the upcoming Partnership Design Masterclass!
If you want to learn more about using the partnership canvas, and applying it to Partnership Design, then check out our Masterclass ticketing page for information & booking.

You can also join the Partnership Design Linkedin group!

Direct contact? Send an email: info@partnershipcanvas.com

Practical Tips to get you started with Partnership Design

Working on partnerships is seemingly straightforward. But when you get into the exercise, you quickly find out that there are many factors at play. For instance, you need to understand your business environment, company vision, and its current business model first, before you can delve into designing winning partnerships.

To set you up for a successful Partnership Design sprint, I recently hosted a live webinar, to provide some guidance of my experience of Business Model Innovation, and how Partnership Design fits in.

Below you will find a recording of this webinar. In the first 30 minutes I share some of my insights on putting Partnership Design into practice for different audiences. After the presentation, I take some questions from the attendees of the webinar.

Here is also a link to the slides I used during the presentation.

Let me know if you have any questions about the approach. I’d be happy to help. Leave a comment below, or on the Youtube channel, and I’ll be sure to respond.

Interested to learn how you can reinvent your industry through partnerships?
Check out our upcoming Partnership Design Masterclasses

Join the Partnership Design Linkedin group for support.

Or get in touch with me directly for specific questions!