Paul Barrett

Every business, no matter what industry or sector they operate in, must manage the basic conflict between three key stakeholders: shareholders, staff and customers.

While a symbiotic relationship exists between all three, as they are each essential for organisational success, they care about different things.

Shareholders are primarily concerned about maximising profits, dividends and market value because they expect a good return on their investment.

Staff want safe employment conditions, job satisfaction, career development and to be properly remunerated.

Customers want to be treated fairly and receive high quality, value-for-money goods and services.

It is the responsibility of management and the Board to balance the interests of various groups, which is relatively easy to do in the good times but infinitely harder when a company is underperforming.

It is also tough to do during M&A discussions when the desires of all parties are heightened, on both sides of a transaction, and everyone is jockeying for what they want.

Shareholders, if they’re sellers, will usually opt for the highest bidder, regardless of whether they’re the best strategic and cultural fit.

If they’re the buyer, shareholders want to snag a good asset for a reasonable price, with the potential to maximise revenue and cost synergies, build scale and achieve long-term growth.

Employees want job security and opportunities for career progression, and customers want more valuable products and services.

How to identify a good deal

Determining the quality of a deal requires looking at a transaction through the lens of each stakeholder.

If it benefits shareholders, staff and customers, then it’s a good deal that’s likely to achieve its targets and objectives.

In the aftermath of any merger, there is a period of disruption. Shareholders, employees and customers face a period of integration, rationalisation and restructuring before the possibility of growth. A company’s ability to facilitate a speedy integration is critical to M&A success.