2 out of 3 #partnerships delivered 🏆 their expected value in the past 3 yrs. The difference between the winners and losers (unsurprisingly) depended on execution.
This is according to Bain’s research of partnerships and M&A leaders, that also concluded that
"Partnerships are a critical extension of the M&A and #growth"
💵 In fact, in the last 10 yrs shareholder return of frequent acquirers was ~ 2X of that of infrequent acquirers, and a vast majority of frequent acquirers rely on partnerships in addition to M&A.
But “as more companies opt for partnerships … they will discover just how different alternative deals are from typical acquisitions—and how critical it is to approach them with a fresh set of eyes.”
Execution is critical, as it’s often the case.
Top 3 WHY partnerships succeeded:
✔️ Clear value creation
✔️ Clear strategy and objectives
✔️ Senior management commitment
Conversely, top 3 WHY partnerships failed:
❌ Lack of cultural fit and trust
❌ Lack of sr. management commitment
❌ Unclear strategy and objectives
🎯 Cultural fit and trust are elusive concepts, so the helpful questions to ask are:
How similar are your risk appetites?
Are market assessments close enough?
What is the level of oversight and sign-off needed for partnership activities on both sides?
What's also essential:
🗽 Have commitment to lifetime management of partnership.
“It’s important to recognize that the future will usually be different than planned. A partnership is likely to perform well on some dimensions and underperform on others as the market evolves.
To keep the partnership relevant, a periodic strategic refresh can help… This is often most effective when done outside of the quarterly review process.”
🤝 Build internal partnership capabilities and playbooks
Whether in a centralized partnerships team (typical for those with more active partnership portfolio) or creating partnerships skills in business units, it's critical to be thoughtful on:
Creating partnership knowledge management - guidelines, processes, lessons learned, etc.
Managing overlaps and collaboration among the partnership team, management and business unit leadership.
Source: Bain & Company