2021 marked a record year for Mergers & Acquisitions with more than $5 trillion in global volume. With robust economic growth underpinning elevated CEO confidence, corporations pursued transformative M&A to accelerate expansion. Sitting on a record $2.9 trillion of available capital, private equity sponsors transacted at an unprecedented pace. High equity valuations (particularly in the U.S.) and relatively low interest rates contributed to the record M&A environment, both of which persisted throughout 2021 (Morgan Stanley1).
Embracing Change in the Workplace
A record number of M&As means a record number of big changes for many organizations. It’s important for leaders to remember that to employees, change, like a business transition, can sometimes feel like a loss, therefore it’s critical to implement a change management strategy that communicates the vision and goals for your transition plan from the start. Employees who feel prepared and part of big decisions will have an easier time adapting to the uncertain road ahead.
Choosing Leadership for Successful Transitions
Studies show that two years after executive transitions, anywhere between 27 and 46 percent of them are regarded as failures or disappointments. Lack of engagement and lack of action are often the culprits of failure, making it crucial to ensure new leadership has the right soft skills to implement transformational change. Maximum ROI expectations and early guarantees make the stakes even higher in private equity transitions.
The good news is that nine out of ten teams whose leader had a successful transition go on to meet their three-year performance goals. To ensure your leadership team can transition the business successfully, choose candidates with the ability to:
- Evaluate the organizational capabilities, which is integral to meeting future objectives
- Immerse themselves in company culture, allowing them to become a trusted leader that can influence change
- Assess the current team for strengths and weaknesses to improve performance
- Understand their role in the organization, consequently spending their time where it’s needed most
- Consider stakeholder expectations to develop good working relationships
How an Executive Search Firm Can Help
Assembling a leadership team that can successfully manage a business transition needs to be approached strategically, thoughtfully and skillfully. Torch Group’s experience in executive search across diverse industries, along with our competency-based behavioral interviewing protocols and comprehensive Signature Search Process™, allows us to find and reliably evaluate leaders who understand the operating efficiencies and innovative management techniques that are pivotal to effective transformational leadership.
To learn about our Signature Search Process™ and how we can map search and retention strategies for your specific talent needs, please contact Susan Acker at sacker@torchgroup.com or 203-536-2249 or complete and submit this form and let us know how we can help.
12022 M&A: Continued strength post peak. Morgan Stanley. (n.d.). Retrieved June 1, 2022, from https://www.morganstanley.com/ideas/mergers-and-acquisitions-outlook-2022-continued-strength-after-record