An old comic strip in my office shows the character Ziggy in a car facing two billboards: “Highway of Life” and “ Expect Delays.” This sentiment seems to apply to Sanofi-Aventis’s prolonged merger negotiations with Genzyme.
According to published reports, the apparent source of the delay has been agreement upon price, given the manufacturing problems at Genzyme. However, a bigger question the board must assess is whether senior management can address these issues within a timeframe that provides the expected return on investment.
This situation is not unique. As opportunities for “bargain” deals resulting from performance problems become more plentiful in our rapidly changing business environment, it’s critical for boards to go beyond questioning the logic and price of the deal and also assess the potential impact of cultural issues that can make or break success.
Here are questions to ask senior management:
What are the business culture strengths and obstacles that will impact integration (e.g., speed of decision making, communication flow, etc.)?
What plans exist to deal with the natural organizational anxiety and resistance that comes with mergers?
What is the plan for communicating with stakeholder groups to gain their support before and during integration?
Asking these and other questions regarding culture, combined with questions regarding strategic fit, will enable your board to not only accelerate ROI in the short term but in the long term as well.
Pamela S. Harper
Pamela S. Harper
Pamela S. Harper is founding partner and CEO of Business Advancement Inc (BAI). and author of the book Preventing Strategic Gridlock (Cameo Publications). She is on the boards of two nonprofit organizations. Since 1991, BAI has collaborated with senior executives and boards to develop strategy, increase leadership effectiveness, and improve organizational engagement and capability for maximum innovation, growth and profitability.
The recent whirlwind of legislative and regulatory activity has made it obvious that boards must be ready to adapt to a constantly changing business environment. As boards react to the new regulations and restrictions, I’ve crafted a list of eight things boards can do now.
Focus on the business, especially during this time of economic stress and volatility
Evaluate engagement with stockowners to find ways to improve two-way communications with an emphasis on new technologies and methodologies
Recently, interim CEOs have found themselves in the media spotlight.
This week, the Fortune magazine article “Should CEO be a Team Job?” notes that interim CEOs could be found at companies such as Borders, Sara Lee, and GM, while the boards searched for appropriate replacements. Though an interim CEO may be part of an “emergency” succession plan, boards must prepare to fill leadership roles when needed. Three to five years before a CEO transition is expected, the board should begin to develop long-term succession plans.
According to the 2010 NACD Public Company Governance Survey (available Oct. 2010), most boards have taken the necessary steps to prepare for an abrupt CEO departure:
70% include development of internal candidates
69% include plans to replace the CEO in an emergency
57% include long-term succession planning (three to five years before an expected transition)
21% include engagement of an executive search firm to identify external candidates
To continually ensure that the current leadership is meeting the needs of the company, directors should engage in CEO succession planning. Well-timed transitions to new leadership enhance long-term shareholder confidence and value.