Digital
Article
Growth Strategy
M&A Should Be
Transformational — Not
Transactional
The traditional approach is less likely to generate lasting growth amid
volatility. by Jennifer J. Fondrevay
This document is authorized for use only in Prof Harsh's DXB/ GMBA Oct24-II / Post-Merger Integration (PMI) at S P Jain School of Global Management - Dubai from Apr 2025 to Oct 2025.
HBR / Digital Article / M&A Should Be Transformational — Not Transactional
M&A Should Be
Transformational — Not
Transactional
The traditional approach is less likely to generate lasting growth amid
volatility. by Jennifer J. Fondrevay
Published on HBR.org / May 29, 2024 / Reprint H087XZ
jayk7/Getty Images
Businesses have considered merger and acquisition (M&A) deals
as a viable growth strategy for more than a century. In the past,
these deals have typically been transactional in nature, pursued
for economies of scale and to consolidate costs. But today, in an
era where companies need to disrupt themselves or be disrupted,
organizations are increasingly pursuing M&A for growth through
business transformation.
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HBR / Digital Article / M&A Should Be Transformational — Not Transactional
For example, General Mills (GM) has evolved its M&A approach
over the past decade. “Prior to 2017, General Mills largely pursued
more opportunistic deals, expanding its consumer packaged goods
offering with strategic acquisitions like Annie’s organic and natural
food products,” shared Doug Power, former Global Head of M&A for
General Mills. “In 2017, we pursued transformational growth with
our acquisition of Blue Buffalo Pet Products, Inc. for $8 billion. The
acquisition positioned General Mills as the leader in the Wholesome
Natural pet food category and successfully reshaped our product
portfolio.”
M&A’s strategic shift from business “transaction” to “transformation”
presents a paradox: yesterday’s transactional approach — which
seeks certainty, standardization, and continuity — has more limited
success in today’s volatile business landscape and won’t provide
transformational results. To unlock the growth potential that
transformational M&A can bring, leaders need a shift in thinking and
behavior.
In my work consulting with organizations around the world on M&A
deals, I’ve witnessed firsthand the failings of a transactional approach
post-deal. Leaders often want to rely on past playbooks to make
decisions, and overestimate their ability to predict the future and
anticipate how things will play out. They equally underestimate how
employees, business partners, and customers will react and adjust to
change. To navigate the ambiguity inherent in M&A, leaders need to
develop the right mindset — one that adapts and sees uncertainty as an
opportunity, not a threat. When leaders think in this way, their behavior
shifts as well, enabling the organization to pursue a more agile approach
to the integration.
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HBR / Digital Article / M&A Should Be Transformational — Not Transactional
When pursuing mergers and acquisitions for true transformative
growth, leaders need to adopt a new approach. Here’s how:
A New Approach to M&A
M is for Mindset
When pursing M&A to transform a business, leadership mindset
development must be prioritized. A mindset that thinks transactionally
will expect traditional playbooks to work for each merger or acquisition,
expecting predictable outcomes regardless of the size or type of deal. Yet
a mindset that doesn’t settle for status quo thinking but asks “What are
we not thinking of?” is what leads to true transformational growth.
To encourage leaders to adopt the right mindset and embrace
uncertainty, conduct a premortem. Coined by cognitive psychologist
Gary Klein, a premortem analysis imagines that a project has failed,
and the team generates reasons for its failure. With an M&A premortem,
the leadership team (or board) imagines that the deal has failed and
ideates around potential causes and possible solutions. The exercise
shifts leaders’ thinking from expecting predictability to recognizing that
variables will change and influence deal outcomes. The benefit is not
only in considering ways to adjust, but also in adopting a more flexible
mindset.
As one Software-as-a-Service client shared as they were merging with
another SaaS company, “Doing a premortem informed our leadership’s
thinking going into the deal. We recognized the flaw of certain
assumptions and thinking those through gave us greater confidence in
the transformation.”
A is for Agile
If Mindset is about where you are going, Agile is about how you get
there.
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HBR / Digital Article / M&A Should Be Transformational — Not Transactional
Earlier in my career, I worked in technology, leading B2B marketing
globally for navigation technology company, NAVTEQ (acquired by
NOKIA in 2008). NAVTEQ developed digital map data for Global
Positioning Systems (GPS). The company used an agile approach
to product development — adaptable, responsive, and iterative —
to evolve the navigation offering in ever-shifting market conditions.
Organizations can apply this same agile approach to manage the
external and internal influences present in M&A, adjusting as new data
emerges.
Imagine that you’re driving through the city, and your GPS is only
as good as yesterday’s traffic report. That’s how too many M&A
integrations have been approached — making decisions based on a one-
dimensional “map” of static playbooks or checklists, without listening
to the live updates of competitive shifts or cultural assimilation
challenges. Thanks to advances in navigation technology, GPS systems
can now access real-time data, and recalculate a route with every new
piece of information received. Drivers can make informed decisions on
how they will get somewhere leveraging new data, as well as their own
knowledge, such as the ability to take the HOV express lane because
they now have a passenger. Just as GPS uses data to inform the driver
of changes ahead and possible new routes, an agile approach enables
leaders to navigate the complex landscape of M&A by dynamically
adjusting their strategies based on real-time insights.
An agile approach encourages organizations to be willing to pivot, much
like a driver uses live traffic updates to avoid congestion.
Developing the Right Mindset to Be Agile
Beyond cultivating a mindset that embraces uncertainty, to successfully
navigate M&A transformation, leaders need to understand from the get-
go that plans will change and they’ll need to remain flexible. Prepare to
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HBR / Digital Article / M&A Should Be Transformational — Not Transactional
think beyond the old playbook and standard checklist. “When people
use a checklist approach to M&A, they tend to stop thinking,” said an
integration lead of a technology company I spoke with. “They focus
more on getting through the checklist than they do on thinking through
what the right next step might be. When identifying possible M&A
teammates, I look for a tolerance for ambiguity and desire for clarity.”
Playbooks can be your foundation for guidance, but consider them as
fluid.
To embrace a more agile approach for transformation through M&A,
consider adopting these principles:
Design the deal, define objectives and key results (OKR), and divide
work into sprints.
View the deal vision as a “thesis”, to be tested and measured by OKR’s
your team commits to from the beginning, and divide the work into
short and long sprints. “Retaining key talent for two years, minimum,
was a critical OKR for a target acquisition,” shared the Integration
lead of a technology company I spoke with. “We committed upfront
and tailored the integration sprints to meet the objective. Before
the deal closed, we designed a coaching / buddy / mentor cohort to
support the acquired team and within 30 days of closing, incoming
managers received specifics on the buddy program. Another 90-day
sprint provided core manager training for incoming managers.” Identify
sprint interdependencies and be ready to shift resources as needed.
Solicit, assess, iterate, and adjust.
Once the integration launches, cross-functional team leaders should
solicit data consistently and assess what’s working and what isn’t.
With this knowledge, teams can iterate solutions and adjust as they
evaluate the impact of changes. “For acquisitions, we adopted a
‘listening strategy’ including focus groups and pulse surveys,” revealed
seasoned M&A executive Klint Kendrick, when he was HR lead at
an acquisitive Fortune 500 software company. “For one acquisition,
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HBR / Digital Article / M&A Should Be Transformational — Not Transactional
the survey confirmed that the company was great at generating new
business, but revealed recurring revenue challenges due to suboptimal
customer support. We reassessed the post-acquisition organizational
structure and shifted resources to customer support. The adjustment
led to about a 15% increase in recurring revenue within six months.”
Debrief and operationalize where possible.
Debrief throughout, breaking down the work sprints to identify
successful aspects and areas for improvement. Look for patterns across
similar situations and consider which practices can be standardized
— this can improve processes, mitigate unnecessary costs, and
foster teamwork. Ian Paice, who supported the enterprise software
management team at K1 Operations, concurred. “Pausing to reflect on
the milestone completed not only gives you a better chance of avoiding
misses in the future; the effort fosters trust among the team.” Learn
from the positive and negative experiences.
Assess key employee metrics.
Throughout this process, assess for key employee metrics tailored to
M&A, including:
• Did acquired employees stay beyond the merger?
• Are new employees fitting in well with the organization and its veteran
employees?
• Are new and veteran employees sharing know-how and learning from
each other?
• Do both new and veteran high-potential employees have pathways to
advance in their careers within the new organizational structure?
By monitoring these metrics and following the principles above,
you can promote agility, adaptability, and continuous improvement
throughout an M&A integration.
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HBR / Digital Article / M&A Should Be Transformational — Not Transactional
In the ever-evolving M&A landscape, Mindset and Agility are the
compass points which can guide organizations toward growth and
lasting change. Combining an adaptive mindset with an agile approach
arms leaders with a preparedness to pivot as needed. Success in M&A
is no longer achieved by following static playbooks; it comes through
navigating the dynamic landscape with adaptability. Leaders who
embrace uncertainty and adopt an agile approach to M&A integration
can achieve the transformative potential that M&A promises.
This article was originally published online on May 29, 2024.
Jennifer J. Fondrevay is Founder of M&A consultancy Day1 Ready,
Human Capital advisor for Virtas Partners, and best-selling author
of NOW WHAT? A Survivor’s Guide for Thriving through Mergers &
Acquisitions. As a former global marketing executive, she has been on
all sides of the deal equation.
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