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The Corporate Digest

Dear David,
A couple of articles you might find interesting.
The Essence of Character

It has become too easy to criticize the unethical behavior of corporate and political leaders these days. The reality is that the most ethical human begins can fall prey to the lures of riches and abundance.


Crescentio Torres from the Center for Creative Leadership says the following: "Ethical leadership isn't about avoiding the worst behaviors.  It is not about technically following laws and regulations.  Ethics determines fair and honest behavior and establishes boundaries about how we relate to each other. In that sense, the only way for people to work well together, and to have a good professional and personal relationship, is to think and act in an ethical way."


There are nine aspects which produce the essence of character and we will use the word 'character' as an acronym.  This edition of The Corporate Digest examines the first four aspects.


C=Clarity Be clear about things.  Let others know where they stand with you.  Sometimes it is suggested that it is a good things if people do not know where they stand as it will keep them on their toes.  However, a lack of clarity leads to uncertainty which in turn leads to confusion.  The most ethical leaders go out of their way to provide clarity to those that they work with.  Clarity produces certainty which in turn leads to focus.


H=Honesty Let your yes be your yes and let your no be your no. Why do people second-guess the words and deeds of certain people and leaders?  Because they are known to be dishonest. As you build a reputation, it is important to make sure that it will be a reputation of honesty.  Be honest in your thoughts, words and deeds.  The most important person who you need to be honest with is yourself.  Once you lie to yourself, dishonesty will become the norm in all the other dimensions of your life.


A=Accountability Leaders with character know their weaknesses, know the areas in life where they are prone to temptation and they actually do something about it.  They rely on accountability.  They build accountability structures into their lives that help them to maintain their character. Proactively being held accountable by others is an approach that will assist in preserving character.


R=Responsibility Take responsibility. Our culture shies away from responsibility, but we need to embrace responsibility.  Few people take responsibility for their own lives, let alone for their own jobs. People of good character take responsibility for their lives.  They also take responsibility for their jobs, for executing tasks and for finishing what they are being paid to do.  Seasoned managers will confirm that having people in their teams that take responsibility for their tasks are few and far between.  You want to be known as someone who takes responsibility and does what is expected of them.  Be known as someone who accepts responsibility.

Next time we'll look at the letters 'acter' of 'character'.

M&A Successes

In July we looked at some well-founded reasons for M&A failure. This month we'll look at some of the aspects of success in M&A, some of which may surprise. 

As with many other areas of human endeavor, there is no substitute for experience.  In fact several companies with high records of M&A success have turned growth through acquisition into a core skill. They make many smaller acquisitions and are able to devote a small, well trained team to the task.

The ingredients of success in M&A include the following:

  • Operate strategically and not opportunistically. Bain & Co, the consultants, produced a surprising finding based on interviewing CEOs of 250 companies.  The surprise was that 40% of the CEOs interviewed did not have an investment thesis, and 50% of those that did found their investment thesis to be incorrect within three years.  What this means is that they could not clearly articulate why they had made a specific acquisition and many acquisitions were made for the wrong reasons.  Given the enormous amount of resources, financial and human, invested in acquisitions, it is critical to carefully hone your acquiring strategy.
  • Stick with the industry you know.  McKinsey and Co., another consulting firm, warn against the temptation to move into other industries with which you are less familiar, especially in times of economic downturn.  It can be tempting to get involved in an industry that is adjacent to the one you already operate in.  However you may not know enough about that industry to be competitive and it may be more fruitful to look in your own industry.  The conclusion is that you should look at your own industry as one in which there will be ups and downs and look to take advantage of those cycles.
  • Understand your basis of competition, and build on it.  Bain suggest that understanding what makes your own company tick is a good starting point for identifying which companies may be suitable acquisition targets.  Sometimes the basis of competition is more subtle that it appears at first glance.  Companies rarely operate on one basis of competition but if your company has  low cost as a basis of competition, it may be a very uncomfortable fit with a company that sells branded goods, for which cost control is less of an imperative.
  • Implement internal procedures to make sure that you get the deal at the right price.  It is sometimes said that financial buyers such as private equity companies make better buyers than trade buyers, as their investment decisions are based entirely on financial considerations, whereas trade buyers can be swayed by invalid thinking, such as 'this could be our last opportunity to acquire such an asset', and leads to overpaying.  Whichever type of buyer you are, it is important that you implement internal disciplines to lower the risk of overpaying.  For example, empower the negotiating team to operate only within a specific range. Pressure to exceed this range needs to be referred to an executive who is not as close to the deal.  One of the hardest things to do is walk away from a deal in which you have invested considerable time and money.  Yet it may be the key to M&A success.

Mergers and acquisitions may not be a lost cause in terms of value creation, but is clear that they need to be well thought through and that it is essential to build up a track record of success on smaller acquisitions before launching into something bigger.  Maintaining a strategy for M&A is a key to success.


Consult Levy has worked with many business teams to improve their effectiveness. We help with the tough decisions and help businesses, and their people, grow. To discuss how we can help you with any of these matters, please call 858-453-3778.  Learn More

October 2010

Picture of David Levy 
David Levy
Principal - Consult Levy
In This Issue
The Essence of Character
M&A Successes



Contact Information
David Levy

8731 Caminito Abrazo,     Suite 201
La Jolla, CA 92037 USA
Phone: 858-453-3778   
Fax:     206-279-1606
For more information on these topics - or to discuss any of your business needs, contact David Levy or call 858-453-3778

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