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Entrepreneurship

EPISODE

19

Leadership Skills in Mergers and Acquisitions

Leadership Skills in Mergers and Acquisitions

Welcome to a riveting episode, where we reveal the enigmatic world of leadership and its profound impact on mergers and acquisitions. Today, we unravel the predicament of inadequate leadership and management capacity, a vexing issue that Robert Sher suggests are contributing factors to the haunting 83% of merger deals that have left shareholder returns bereft of the anticipated boost, according to a study by KPMG.

In this episode, we uncover the art of crafting an executive leadership team that commands attention, and unlocks ingenious strategies to forge a leadership cadre worthy of greater shareholder returns.

The first strategy involves a meticulous assessment of skill gaps within the executive leadership team to create a blend of talents and expertise. The second approach centers on recruiting steadfast leaders with passion, propelling the organization towards triumphs and achievements. The third focuses on cultivating leadership attitudes in entrepreneurs, fostering a culture of inspiration and innovation.

Finally, the fourth centers around the alchemy of organizational culture, aiming to uncover the formula for nurturing a growth-oriented and synergistic environment, propelling the organization to unprecedented heights.

Joining us from London, Matteo Turi is the Chairman & Founder of Letoon Holding, a pre-IPO company operating at the forefront of the Global Food Waste Epidemic.

Matteo, thank you so much for being here.

Matteo Turi: Thank you, Felicia. It's a pleasure to be with you today.

Felicia Shakiba: Matteo, what is Letoon Technology?

Matteo Turi  (02:05): Letoon technology is a company I co founded with some of my partners. The purpose of the business is really to utilize the latest possible ultrasound technology to make profits in a circular economy.

What is your role at Letoon and what is your expertise? 

Matteo Turi  (02:25): At Latoon effectively, I'm the chairman and co founder. So my expertise is really to shape the leadership of the business to initially with the different phases The first phase is to start the business, then to execute, and then to make it successful. And then for this, I'm likely to recruit a few leaders in the next few months. 

Matteo as the Chief Financial Officer and experienced professional in mergers and acquisitions, could you provide us with a glimpse into your unique perspective and responsibilities of the significant roles?

Matteo Turi  (03:00): Sure, in my capacity as a Chief Financial Officer, I bare a multifaceted role that entails really an extensive array of responsibilities. My role to the extent to comprehensive financial oversight, including financial planning, analysis and risk management for the entire organization.

Now within the realm of mergers and acquisitions, my role takes on a heightened significance. I'm entrusted with the pivotal tasks to identifying prospective opportunities, but you have to orchestrate rigorous due diligence processes ensuring the financial facet of a transaction, and normalize seamlessly, really, with the overarching strategic imperative of the organization. 

So I'll just, give you an example in the case of MoneyGram acquisition quite a few years ago, between business, due diligence and planning did not go as expected and when MoneyGram embarked on the acquisition, they initially conducted a thorough due diligence process, examining the target company's financial records operation, and overall financial health.

The objective was to ensure a smooth transition and to have an accurate understanding of the European business financial standing. However, during this due diligence process and expected issue arose, it was discovered that the balance sheet of the European business had been substantially overstated. This meant that the assets and liabilities of the target company had been mis represented, laden to a significant discrepancy between the reported financial health and the actual financial status. 

Now, the overstatement of the balance sheet has serious implication for the acquisition. It meant that the financial foundation on which MoneyGram's initial planning and valuation had been based was fundamentally flawed. The discrepancy threatened the feasibility and success of the acquisition.

The financial situation of the acquired company was not what MoneyGram had initially anticipated in response to today's unexpected revelation MoneyGram had to substantially modify the planning needed to reassess the deal's terms, adjust the valuation, determine the actual financials of the European business. Additional checks and investigations had to be conducted to accurately gauge the target company's assets and liabilities and overall financial stability. 

The situation underscores the importance of thorough due diligence and the need for flexibility in planning during complex business transaction such as acquisitions. The overstatement of the balance sheet forced MoneyGram to that and reevaluate their approach highlighted in the critical role of accurate financial data in making informed decision, and mitigating potential risk of mergers and acquisition.


And, an adequate leadership and management capacity have been identified as contributing factors to the failure of many merger deals. In your experience, what are some common leadership challenges that you've observed in these situations?

Matteo Turi  (06:18): Generally speaking, even in normal business operation, leadership is an issue in itself. However, in the realm of mergers and acquisition is fraught with complexity and one recurring theme that often pertains to leadership, and management inadequacies. So it's essentially to really underscore that the challenges associated with M&A encompass a multitude of facets.

The fusion of leadership teams are the genetics from distinct organizational culture is one issue, which compounded the problem really. Also necessitating really a nuanced approach to ensure alignment and cohesion. So that makes it even more difficult. The Furthermore, managing employee morale amidst the turbulence of change and uncertainty can prove to be again a significant challenge. 

To address these multi faceted challenges, in my view, it's imperative to emphasize the criticality of effective communication. I will say high quality communication, the formulation of a shared vision and I will say the cultivation of really very resolute leadership roles.

How do you approach identifying skill gaps within an executive leadership team and what steps to take to ensure a harmonious blend of talents and expertise? 

Matteo Turi  (07:47): Yes, the identification of skill gaps within an executive leadership team really entails a methodical and comprehensive assessment. This process really commences by conducting an exhaustive evaluation of the prevailing strengths and limitations of the existing team. Subsequently, the quest for complementary talents begins.

It's vital to really put in place those mechanisms for clear and unambiguous communication while fostering an environment where mutual goals are firmly established. This is very important mutual goals that need to be not only established, but communicated.

And this collaborative undertakings are pivotal in ensuring harmonious simulation of diverse talent and expertise, ultimately, culminating in a robust and well rounded leadership team are just going to put some more sort of, you know, you know, stress to this subject. 

But in any successful venture, whether it's a project a company or an initiative, effective leadership is really the cornerstone of achievement. 

Leadership, however, it is not a one size fits all concept. So it cannot be just described like in a book, really, it's a collaborative effort that thrives on the diversity of skills. For example, there's the value of the complimentary leadership skills within a team that I know very well. Specifically, I liked in the roles of the three people: One is the Coordinator; the second one is the Finisher; the third one is the Creative Visionary. 

You know, that's the perfect team in my view. The Coordinator - who's the Coordinator? He is the backbone of our team, ensuring that every part of the project or plan is seamlessly integrated. They have mastered organization, structure, delegation, keep us on track to create roadmaps, make sure all the moving parts are working together efficiently. Without them would be lost in chaos. They are the navigators who provide direction, say. 

The Finisher. The Finisher is the one who ensures that nothing is left incomplete. They are meticulous, detail oriented, dedicated to returning plans into reality. They have a keen eye for quality don't rest until every task is not just finished, but just finished to perfection, which sometimes could be a question to be asked sometimes. The Finisher's dedication is what transforms great ideas into tangible result. 

And then we go the Creative Visionary, sometimes it's the dreamer of the team. This leader is the spark that ignites innovation, and brings fresh perspective to the table. They are unafraid to think outside of the box to challenge the status quo, and to inspire the team with really bold ideas.

The Creative Visionary helps us to adapt and evolve, and shooting that our endeavors remain relevant and forward thinking, which is really important. And what's truly amazing is that these roles are not in opposition, but in harmony. The Coordinator's ability to organize complements the creative visionary penchant for ideation to create in ideas, really. The Finisher's dedication, ensure the Coordinator's plans are executed to perfection. 

Together these roles create a dynamic leadership ecosystem, I call it, where each skills enhanced the others. So I think it's worth remembering no role is more important than another in this tapestry of leadership. We call it like that. We need all the skills working in tandem to achieve our goals. Our diversity should be our strength for always, and it's what makes our team exceptional. 

So as we continue to work together, we always appreciate the unique qualities each of us bring to the table. So be honest, this power of complimentary leadership skills to reach new level new heights, I think it's important to call a stress on the on the need for diversity, and for the integration of different skills. 

Felicia Shakiba: I actually really loved what you said about all of those pieces. I think that brings a lot of things into perspective. So I think all of those different types of leaders provide an extremely well rounded leadership team, especially in a or intrapreneurial environment.

So when you think about enlisting stalwart leaders with unwavering passion, is one of your strategies for building a successful executive leadership team. Can you share an example of a leader you've brought on board who exemplified this passion and the impact they had on the organization? 

Matteo Turi  (12:34): First of all, I'd like to say that cultivation of essential leadership aptitudes is, I will call it foundational to engender in a culture of inspiration and innovation. Yep. So in the context of leadership, these activities encompass a spectrum of qualities like adaptability, resilience, empathy, a fervent commitment to a growth mindset. Yeah.

So let me just give you an example a leader, I will steeping these attitudes, accepting, accepting a readiness to embrace change. I will call it truly known and unwavering resilience when confronting challenges and also very empathetic and supportive approach to the team dynamic. 

I just gotta give the example of a corporation - I worked for a few years ago with a traditionally hierarchical organization, in the manufacturing sector with a culture that prioritizes efficiency and cost cutting above all else. So the company had a stagnant growth rate and was experiencing declining shareholder value due to increased competition and market changes. So really, the leadership recognize the need for a cultural transformation to adapt to the evolving business landscape.

So the CEO, John decided to lead a transformational change, envision the cultural shift that prioritize innovation, employee empowerment, and a customer centric approach. John believed that this new culture would enable the company to respond more quickly to market changes and improve customer satisfaction. Thereby, obviously, that's a consequence boosting shareholder value. 

A cultural transformation - now to bring about this cultural shift, Jonathan and his team effectively implemented several key initiatives. You know really three big things - open communication is the first one. They first opened communication channel to encourage employees to share ideas and feedback, regular town hall meetings suggestion boxes were introduced. The second one was employee development. So the business invested in employee training, development programs, encouraging employees to take ownership of that career growth. 

The third one was a customer centric approach. Now this was integrated in all aspects of the business with departments working collaboratively to improve the customer experience, positive impact So employee engagement with the new culture employees felt more engaged and empowered, they became more creative and proactive leading to a surge in innovative ideas and increased productivity.

Rapid adaptation as well, the company cannot quickly adapt to market changes, leading to the development of new products and services that met customer needs. This allowed the business to gain a competitive edge, and then customer satisfaction. As the organization obviously became more customer centric, the customer satisfaction improved significantly and the business started to win back customers and uplift in yields as well.

Shareholder values it's almost like a consequence over a few years, those changes positively impacted the organization's financial performance. In turn, boosting shareholder value.

The company price-  the price increased due to improved financial results and he became more attracted to investor as well. So what's the conclusion here the transformational change in this business culture driven by visionary leadership, profound positive impact and employee engagement, adaptability and a customer centric approach led to increased financial performance and ultimately improve shareholder value. In my view, this example demonstrates our cultural transformation can be a catalyst for positive change in a business, really.

How can a strong executive leadership team together contribute to improved financial performance through culture?

Matteo Turi  (16:33): I will say this that in this particular situation, I mean, this is what I personally my opinion and this is where a transformative shift in organizational culture really bolster performers and international value is eminently in the industry. 

This transformation was effectively I will say anchored in a strategic focus on inclusivity and diversity, which to me are the two big drivers for performance as well. And for this the the the overall culture of the business, the organization leaders pose a commitment to fostering an inclusive environment with a broad spectrum of perspectives and voices. And the result was a surge in creativity, the generation of lots and lots of new innovative ideas. 

Now, this transformation gave tangible through it in the form of heightened innovation, as superior performance. I will say as a lateral effect, there was unequivocal immense announcement to show the value of a natural consequence,

The merger and acquisition landscape, this can be highly complex and challenging. How do you ensure that leadership roles in merged companies work cohesively to achieve the common objectives? 

Matteo Turi  (17:54): This is a very complicated - what I'll say is the amalgamation, if that's the right word, of the robust executive leadership team functions as a potent catalyst for augmenting financial performance, but through cultural influences, yeah. So by collectively formulating a shared vision, and shared values as well, such teams can really, I would say inculcate an ethos of accountability, excellence, shared objectives, yeah, throughout the entire organization.

So every already thrives on this culture really, and leadership that leads by example, multiply this propagates a culture of stringent accountability, and say, I would call it relentlessly strive for excellence., as intrinsically poised to motivate the broader organization cohort. 

Sometimes there's some confusion between generosity and excellence. Actually, a leader who creates another leader is an excellent leader. 

Sometimes people are generalists not it's an excellent leader I would just stress on that. And this motivational impotency is pivotal in really fostering a collaborative spirit. Ultimately, the objective is to steer the organization towards enhanced financial success. And it's well understood that in a merger situation in a change situation, the difficulty is multiplied by many times compared to normal situation.

What advice would you give to entrepreneurs looking to build their executive leadership team from scratch, to ensure that they have the right blend of skills and attitudes? 

Matteo Turi  (19:42): Yeah, I mean, entrepreneurs, they tend to be a very lonely figures in our society because society doesn't understand the incredible contribution they're given to us by creating jobs, by creating wealth. But the entrepreneurs themselves need more education on how they can improve their own wealth. So for entrepreneurs embarking on the younger or constructing an executive leadership team from the ground up the imperatives are really manifold. 

The foremost consideration is really what I would call it and orchestration of the blend of skills, competency and attitudes. This I guess I would call it amalgamation is the bedrock upon which a leadership team's effectiveness eventually rests, it's imperative to place an emphasis on the cultivation of a diverse and complementary of real skills. 

So additionally, the implementation of attitudes and caparison, I will say adaptability, definitely, passion, resilience, all these are instrumental really. And these attitudes should be really carefully aligned with the, the overarching vision and values of the company really so. And ultimately, that will position the team as a potent rubber band for organizational growth.

And again, I will say this is where there is a world of extra dedication the entrepreneurs deserve to receive, when they take the risk of creating a new business, they create the risk, risk in their own money ready. And then, and by doing that, they create jobs, they create a career within the economy. 

And one follow up question for you. You talked about the different types of skill sets that are critical, like the different types of roles that are critical for leadership executive team to thrive, how important is it to have someone on the executive team in a people focused role like a Chief People Officer? When does that become critical to have that executive at that level?

Matteo Turi  (21:52): It's always, it's always critical, I would say. Really, when you go for organizational growth, often you find complexities related to scaling operation, and a strategic imperative of venturing into new markets really. So what I was saying before the adaptation and the diversity of the team requires really a very careful management from the human resource standpoint.

The team asked to have diversity in the skill of the player, if it's a bit like any sport, you play in a sport you have the people are very good at finishing score a goal you got people are very good at defending from an attack. Usually finance, finance stands on the defense, the the operation, the power and cents on the sort of midfield, and the commercial teams stays on the at the forefront, trying to score all opportunities. Even within those teams, those departments, there's a need for diversity of skills, diversity of inclination. 

And I will say this, any entrepreneur who wants to be successful and want to really create wealth, they will do it through one of the key goal of business in my view, which is succession planning. Without succession planning, the business has very limited value without a good succession planning. 

You want to have, those people are very good. As I was saying before, they are very good at coordinating. But you want to have those people who are very creative as well, who can really create the spark that will let everyone else play better, for example. And on the other hand, is somebody really focused on finishing.

So that does require very strong human resource management. The more the business grows, the more it becomes complex or is the more requires that strategic so people management approach. 

With succession planning, the business will generate value because it will not depend on one person or two people or three people, it will depend on a collection of people who are together working for the same goal.

So yeah, I would always, strongly advise any entrepreneur the moment they decided they want to exit the business, they want to obviously not take profits, were it done. Succession planning is one key goal that takes a long time to achieve. So it needs to start very early in the business journey.

Felicia Shakiba: Matteo, thank you for your time, your expertise, your advice is incredibly valuable. And thank you for being here.

Matteo Turi: Thank you, Felicia was a pleasure to be here tonight.

Felicia Shakiba: That's Matteo Turi, the Chairman and Founder of Letoon Holding in London.

Matteo Turi

Matteo Turi

Chairman and Co-founder of Letoon Holdings and Former Chief Financial Officer

As CEO and founder of Letoon Holdings, Matteo steered a valuation leap from £10m to £140m in the Biotech/Circular Economy sector, showcasing his visionary leadership. Matteo is an accomplished CFO, Board Director, and Entrepreneur, with a 28-year journey across clean technologies, water, renewable energy sectors, and more. His expansive portfolio spans PLCs, SMEs, and startups, marked by expertise in M&A, capital raising, and crisis management.

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