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 accelerating 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 a 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 that 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 are at very high risk if there are drastic changes in their markets. Likewise the BPO or consultancy that sees the possiblity of a merger or acquisition has the ability to adapt existing contracts or form new relationships with acquirers to reduce potential risk or make their client, the acquisition target a more attractive entity and guarantee continuity of their work.
BPO Outsourcing and Innovation Risk
The BPO factory is big and efficient yet is at risk to new innovation that may render it obsolete quickly due to changing client needs of their clients that may erode the value generated by the BPO information factory regardless of contractual obligations. Sooner or later if the BPO factory cannot adjust to new market realities 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 can 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 results in changing 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 the impact to BPO factory costs overseas relative to customers in North America–too much data and not enough time. This analysis dificulty may lead to Risk exposure related to mis-understaning or contractual obligations, inappropriate or missing processes and 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 or other M&A related disputes is enormous and has spawned E-Discovery outsourcing which itself is exposed to Risks that 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 involved in an M&A think about ways to reduce your risk and assess the hidden opportunities M&A will offer you, whether you are ready or not.