Leaving aside that contextual variations that occur with most acquisitions, there are a few logical and reasonably universal questions that need to be asked when searching for an acquisition.


1. Will an acquisition (or JV) assist us in achieveing our corporate KPOs?

2. What characteristics must the target display to best compliment our existing business and our strategy?

3. Are there targets in the market which satisfy our "ideal acquisition profile"?

4. What will it take to "buy" our ideal target? This includes: price, structure, impact on existing business (including culture, product/service mix, people, customers, suppliers, etc), impact on market, regulatory impact, impact on shareholders and stakeholders.

5. Can we afford the price (financial and other)?

6. How complex (painful) will swallowing the acquisition be and is it worth it?

7. How do we structurally acquire (purchase, JV or merger, etc)?

8. When do we acquire?

Generally, if an organisation can get the answers to these questions aligned to their shareholders' interests then the acquisition has a better chance of being successful.

It is highly unlikely that this issues is only as depicted in the media - and most probable that there are other issues at play in Obama's decision. If McCrystal spoke so openly to the media, it is probable he spoke equally openly to others in the force.


If that is the case, he has breached one of the cardinal rules of CEOship - that of engendering confidence in subordinates and maintaining the confidence of the Board. In the military, that is a fundamental principle as lives depend on trusting others.
 
Leaving aside strategic war issues, Obama was entirely correct in making this decision. Either the media's quotes of McCrystal were wrong or they were right. If they are right, then there is no room for reconciliation as McCrystal had lost the President's confidence and had to go.

Philosophically, the Board should always question, and never accept at face value what any committee or management team says.


On a more operational level:

1. The Board must approve both capital and operating budgets. When management operates within those budget (with their embedded assumptions, hurdle rates, and constraints), then management should be allowed to operate to those agreed levels.

2. When assumptions, hurdle rates or constraints change, then the Board is warranted (must) review the budgets (or specific deals/opportunities) to satisfy themselves that they are still commercial, relevant and carry suitable risk exposure.

3. The Board should continuously review the competency of the corporate acquisition team - and the best way to do that is by the team's ability to deliver to promise (i.e. capital and operating budgets).

4. Any/all acquisition variation from budget must be approved by the Board. The Board should then review the root cause of the variation - some variations are legitimate while some surface inefficiency, lack of experience or poor judgement.

5. Even highly experienced and capable acquisition teams make mistakes when they are forced to deal with a situation in which they have no or little experience - hence the need for on-going monitoring.

6. One strategy is to have the Board form an Acqusitions sub-committee if acquisitions are sufficiently large or sufficiently frequent. One or two Board members participate in the deliberations of the Acquisition team (most often as observers) but receiving all minutes, reports and evaluations. Thus Board oversight becomes more focussed; board representation becomes more transparent; and accountability more evident.

7. Board oversight assumes that the Board has the experience necessary to provide relevant oversight - that is not always the case.