Global Risk and Opportunity #IN North American Mergers and Acquisitions.
2010/12/13 Leave a comment
Cantor Chief sings praises of U.S. Equities in 2011 is a simple wake up call that we are about to see new global risk and opportunity related to mergers and acquisitions in North America.
Beyond Unemployment or Growth
Mergers and acquisitions typically lead to growth for companies or brands and unemployment as companies change how they operate as a different business. People become unemployed as their skills may not match the new company processes or new direction or become unemployed as they work for a competitor that must adjust to a harsh new reality. Unemployment always seems to follow M&A though the best companies re-train new or existing employees and may ‘teach’ the rest of their competitors a better way to do business. Either way M&A leads to changes that affect people locally and globally.
BPO Factories and Big Consultancies
The trend to outsourcing manufacturing and back-office jobs in the past 20 years has created overseas opportunities around the notion of the factories the scale of which unthinkable in North America, sometimes single city factories, created to drive efficiency up and cost to the lowest possible level.
Specialized business process outsourcers or big consultancies that operate BPO factories offer savings or other benefits to their clients are now exposed to the risk that their relationships or business models will be destroyed or re-formed as a consequence of M&A activity.
M&A and Outsourcing
Global companies that merge with or acquire North American companies have their own relationships with consultancies and BPO outsourcers and these firms are suddenly exposed to very high risk following drastic market changes and relationship changes that may follow. Likewise a BPO or consultancy that sees the possiblity of a merger or acquisition may adapt existing contracts or form new relationships with acquirers to reduce their risk or make their client, the acquisition target a more attractive entity and guarantee the continuity of their work.
BPO Outsourcing and Innovation Risk
The BPO factory is big and efficient yet is at risk to new innovation that will render it obsolete quickly due to changing client needs that may erode the value generated by the BPO information factory regardless of contractual obligations. Sooner or later the BPO factory unable to adjust to the new market reality will be closed.
Connecting the M&A Dots
Insight to M&A activity and the impact on BPO factories provides high value to consultancies and the BPO factory managers as well as the clients that benefit from their services.
Environmental scans are one way to understand market opportunities where new BPO factories might be established, even in North America, or determine how to best deploy new technologies in the market so that existing BPO factories don’t collapse when M&A changes market relationships or business models.
M&A and Legal Risk
People have a hard time analyzing the data required to understand the global implications of M&A and potential impacts on BPO factory costs overseas and value delivered to customers in North America–too much data and not enough time. The pressure to quickly assess M&A opportunities or merge two companies may contribute to risk exposure related to mis-understaning or mis-measuring contractual obligations, inappropriate or missing processes and increase exposure to quicker or smaller competitors which lawyers see manifested as Intellectual Property suits, Class Actions, Non-Disclosure or Non-Compete violations.
The massive amounts of data that must be processed globally to address these and other M&A related disputes is enormous and has spawned E-Discovery outsourceing which itself is exposed to risks that may include infringements of Privacy.
Faster Insight Depends on People
Understanding the complexities related to global M&A is difficult and there are many vendors that focus on providing services to assist companies and their partners. Some great people who know about this are Dave Snowden or Shai Verma, now at HP and whom I have worked with at PwC.
For those folks who need to go really fast and use their own people and tools we suggest the concept of Resonance and our own SpeedSynch Resonance Maps.
If you employ a BPO factory or consultancy or are involved in a M&A think about ways to reduce your risk and assess the hidden opportunities that change will offer you, whether you are ready or not.