overly constrain M&A activity. Establishing these information, organizations and M&A deal teams can boundary conditions at the outset—with explicit continually cultivate potential targets within agreement from the CFO and the board—can help focused M&A themes while still being opportunistic put teeth into investment commitments and align about deals that present themselves. everyone on negotiable and nonnegotiable terms. Once these themes have been identified, business Taken together, the self-assessment, market leaders should test them to ensure that they assessment, and review of boundary conditions can execute against them—for instance, are there can help executives understand the circumstances enough targets available, and do the right targets under which the pursuit of M&A makes the most exist to fill gaps in the company’s capabilities? sense, as well as the markets they are best The M&A blueprint will be particularly critical in positioned to enter. Indeed, the output of business target-rich environments to help narrow down leaders’ discussions about “why and where” will the list of potentials. be a set of M&A themes that reflect the company’s best value-creation opportunities—those A “gold standard” M&A blueprint is detailed and for which the company has the capabilities and focused on critical competitive information resources to achieve intended strategic goals. (value-creation levers, company capabilities, and so on). To understand whether their companies’ What does a good M&A theme entail? For each M&A themes are detailed enough, business leaders theme, senior leaders should identify important deal should consider whether they would be comfortable criteria (categorizing potential targets by geog- broadcasting those themes to competitors. The raphy, sales channel, product type, and so on) as answer should be “no.” If the answer is “yes,” more well as standard screening metrics like company work on the blueprint will be needed, as it and size, number of employees, revenue growth, product the related themes are likely not specific enough to port folio, ownership, and so on. With this detailed be useful to M&A teams. Undue influences The hypothetical case of the global The M&A team at the cosmetics company, if it were a nail.” This is the approach the cosmetics company points to two common for instance, was reactive. It was swayed by cosmetics company favored—establishing cognitive biases that can emerge when deals sourced by third parties, and a well-organized M&A team but then using any company attempts to pursue program- it ended up inventing growth strategies it to drive almost all growth rather than matic M&A: the shiny-object syndrome around possible, exciting targets applying it only to those opportunities best and Maslow’s hammer. without a clear understanding of how suited to be bought, not built. they could generate value. The shiny-object syndrome—also known Without an M&A blueprint to provide as extreme distraction. Companies that Maslow’s hammer. In his 1966 book an incontrovertible fact base and action continually chase down the next new thing The Psychology of Science (HarperCollins), plan, the cosmetics company’s efforts run the risk of pursuing initiatives in the psychologist Abraham Maslow stated, to implement programmatic deal making wrong order, skipping foundational tasks, “I suppose it is tempting, if the only tool you turned into a quixotic, time-wasting effort. or duplicating efforts and investments. have is a hammer, to treat everything as 62 What now? Ten actions to emerge stronger in the next normal September 2020