"Passivity is fatal to us. Our goal is to make the enemy passive." - Mao Tse-Tung

The business world is now being run by the first generation of business leaders that were brought up watching television from before they could talk.  As a consequence, some of them have a highly developed ability for passivity. This is unfortunately evident, even when their future success requires decisions and action. 

Flying as a passenger in a large plane or watching television use a similar skill set.  Both experiences are largely passive and this propensity towards passivity is potentially more dangerous and far reaching than it may seem at first glance.

Technology, innovation and the free flow of information are the initial drivers of an accelerating pace of change in our world. An undisputable fact of business life is that the only thing which is constant is change.  It cannot be escaped; it cannot be ignored or overcome. Business leaders must learn to adapt. Benjamin Franklin (1706-1790) American statesman, scientist and philosopher, put it more succinctly -                            

“When you`re finished changing, you`re finished.”

One of the key indicators of such apathy I see in business leaders/owners who are nearing retirement (irrespective of age) is a lack of ability or desire to change.  They may have been willing to make changes in the past but many get to a point when they no longer have the energy or the motivation: they wish to stay with what they have always done, well inside their comfort zone.

Habits and resistance to change are actually useful mechanisms in daily life. Humans have developed the ability to create habits, repetitive behaviour that takes little thought or effort as part of a survival response.  Habits, good or bad, serving or destructive, are formed by repetition.  However, when a particular habit is no longer empowering or no longer useful to us; breaking that habit is essential but can take considerable effort and focus.

"Life belongs to the living, and he who lives must be prepared for changes."  - Johann Wolfgang Von Goethe (1749-1832) German poet, novelist and dramatist

My point in relation to M&A is that for far too long, too many have continued behaviour that is no longer beneficial.  And yet the behaviour remains.  There are myriad examples of such M&A behaviour but, for the purposes of brevity and illustration, I will focus on just two.

Bottom Feeding

The first behaviour is from the acquirer and what has become known as ‘bottom-feeding’ - a fairly apt phrase which conjures up a precise image.  The bottom-feeding acquirer is looking to pick up, at a very low price, the scraps that have been discarded by other companies higher up the food chain. 

Over the past ten years, I have noted that this predatory method of seeking an acquisition has become increasingly popular; to the extent that the bottom of the sea bed is now way over- populated.  What was previously an M&A tactic has, in some cases, now become an objective - which is very dangerous.

Rocking Chair Leaders

The second is extremely prevalent with owners who have a trade sale in mind as their exit strategy, but haven’t created a proper plan to make it happen.  The fact that every few months or so they have some half-hearted approaches and even some more aggressive contacts; lulls them into what I would call a ‘rocking chair passivity’ -  Just like an elderly person, sitting in their rocking chair on their veranda, swatting away flies, waiting for their retirement. 

Unfortunately, those pesky flies rarely bring with them the ability to ‘Show them the money’ the owner shareholders need or want. To get the best return for the shareholders passivity does no work as an exit plan and some focussed insightful action is required to attract the ‘right’ type of buyers.

This is summed up most aptly by the father of the theories on survival, Charles Darwin:

"It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change." - Charles Darwin (1809-1882) English Naturalist