Middle Market Acquisition – Surprises and Wisdom

middle market acquisitionIf you make a middle market acquisition, your goal may be to avoid post signing surprises, but Feldman and Kraemer say surprises should be expected. Let’s think about that more. 

They say: “Acquirers should temper their optimism that the target’s management will be just fine. Planning for more changes, perhaps many more changes, in the target’s team would be sensible in most cases I’ve worked with”.  I agree and then you can have happy surprises when it does work out better. 

Another thought they had was “What do you have to believe?”  Do you have to believe that your costs will not go up?  Do you have to believe that the market will improve? Or you have to believe the team can make changes to fit your plans and organization?

Let’s talk about the need for the team to change. Change management is a tall order. Teams do not change easily. Leaders change hardly at all and specifically if you are some distance from them like here in China for example.

Placing a new leader who has been well vetted is good, but how is his/her leadership? Can it handle the demands of change leadership? Or will they resort to manipulating data?

Middle Market Acquisition- What if you bought OSI?

OSI ordered continuous improvement, and the Chinese Management, including a naturalized Chinese Australian, thought it was too hard, whereas changing dates on expired meat was easy.  KFC and McDonalds never knew. The news broke because they got caught by investigative reporting.  This happened in an American wholly owned factory in Shanghai.  OSI said they were set up because the Chinese Australian told the headquarter this. How could a TV camera get into the factory if the GM was doing his job? He had to have employees working against him without his knowledge if that is the case. Either way, the leadership this highly reputable US company had was poor, and they lost an immense amount of money.  This China based GM absolutely knew how to manipulate the headquarters. It is very common that the GM in China has this skill.

Take heart. Good leaders of real honesty with actual change management experience exist in the China market. We know as investigate all and find the 20% who are not manipulators. A midst that small group is some with the real leadership ability you need.

See also 11 Things You Need for Excellent Executive Search China

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Posted in: Private Equity Acquisition Recruitment

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