Transactions to create value and accelerate transformation

Recent PwC research shows that more than half of the respondents see transactions as the best way to keep up with market developments. At the same time, realising value remains a challenge. ‘Deals that support an organisation's ability to constantly adapt have a higher chance of success,' says Moerkerken. "By simultaneously executing transactions and transformations, leaders can create a virtuous circle where both activities unlock more value. The time when organisations could rely solely on organic change programs, setting up internal transformation initiatives and gradually hiring and training talent, is over. This approach is too slow and fragmented in the face of disruptive trends. Transactions enable transformation at a rapid pace; as an organisation, you build capabilities to innovate faster than would otherwise be possible. But a transaction without transformation does not add value - it is crucial to realise the potential value from the transaction.’

’Transformations require transactions in times of rapid change,' continues Moerkerken. 'Developing capabilities - such as digital, ESG, certain steps in the primary chain (such as setting up indirect distribution), reversing business models (from software sales to SaaS), and entering new markets - can no longer be done autonomously. Building everything from scratch takes years, and by then the momentum is gone. Through transactions, you can quickly incorporate skills, assets, and market positions. Think of major acquisitions of AI players or parties that build market positions through a string of acquisitions. 

A transaction requires integration into an existing organisation, plugging into an existing platform, or building/developing an organisation to create new value. To create transformation. A value creation architect is crucial for developing an integrated view of transaction and transformation. Experiences of private equity firms, which specialise in rapidly implementing a change program to create value, can help with this. Due to their funding structure, they often have only a few years to realise value; that means guaranteed action from day one. They are constantly engaged in value thinking, rapid realisations, and challenges in acquisitions. And they combine that with transformational experience and knowledge of different types of transformations, such as technology, workforce, operations/supply chain.' 

'Due to the rapid progress of GenAI, the ongoing digital transformation has become even more urgent. Organisations see transactions as ways to accelerate the adoption of technology and technology-enabled processes, and thus the transformation', Moerkerken says. 'In addition, transactions offer opportunities to create value in new markets and areas. Organisations are increasingly recognising the importance of attracting employees with the right skills and mindset to harness the potential of technology.'

Organisations face a combination of technical challenges, such as integrating technology and data systems, and human-related issues, such as customer engagement, finding the right skills, and integrating different cultures when creating value. Moerkerken: ’Work styles of organisations can clash when they come together. Or individuals and established protocols may be lost when organisational units are divested. The integration of technology and data is related to the size of the organisation and the required reinvention of the organisational model.' 

To make transactions an integral part of their transformation and value creation strategies, leaders need a clear vision of the future. They must be open to and responsive to emerging deal opportunities. ‘Organisations whose transactions have exceeded their expectations more often chose an approach with a clear vision - a transformative intention - behind their activities', Moerkerken concludes. 'Less successful organisations indicate that they prefer to pursue only small transactions, while successful organisations prefer a combination of large and small transactions. 

Success starts with a holistic view of the transformation/transaction journey; as an organisation, you need to understand the value that transformation or transaction can unlock. Then you need to assess how different types of deals can deliver that result. Identify what you want to achieve, determine your position on the transformation journey, and then plan how transactions can help you move forward. To help you determine how to use transactions to accelerate change, our research report includes some scenarios and recommendations for transforming your organisation through dealmaking.’