Philip Atkinson | Consulting Strategies | Experiential |
Products | Articles | Projects | Contact |
|
|
Buyer's Remorse & Post Acquisition Drift
Commercial success associated with acquiring or merging several organisations can be very unpreditable. Whether in the private or public sector any merger will experience key problems.
It’s not just that there are unusual problems with making systems and processes work across several organisations – its much deeper than that. One would think the structural issues of agreeing management teams, strategic thrust etc would be easy but they are not.
What is the New Business Entity and what is its Vision?
The coming together of two organisations is the creation of a whole New Business Entity. It’s not a process that evolves by default leading to full integration. It is not a process that can be carefully mapped from Day 1, simply because the acquiring company does not fully understand what they have taken on until the deal is signed.
The company execs will have undertaken a form of ‘due diligence’ but they will have had access only to certain information in the data room. There will be confidentiality agreements that will bind them and previous partners and suppliers, and much ambiguity.
Northern Rock
Much of what I say about M&A activity is also applicable to Northern Rock. How can the Government manage NR back into the Private Sector?
Post Acquisition Failure Rates
Failure rates are high, as 56-80% of acquisitions never achieve the synergies for which they were originally created. It’s not all down to structural issues either – systems and process have to work across the two businesses while they are building the new entity.
It’s amazing some time how long it takes to get the structure right. Months after acquisition key people are still not in post and sometimes years go by and opportunities are lost because the new entity does not make staffing decisions fast enough.
Product lines, rationalized service provision, customer management, retention and satisfaction will cause problems and put the new entity at risk. What happens if customer service levels decline and the consumer walks to a competitor?
Culture’s Consequences
Getting the Culture right is a key issue that most acquiring companies get wrong, yet it is the one thing that can bring the business together. Forging strong culture, tying this in with monitored and measured business plans and metrics, together with a firm and robust post acquisition strategy staged from Day 1 – to Day 500 with defined deliverables with core people responsible is the answer.
The failure to do this will create a ‘cocktail of cultures’ where the efforts of both companies are diluted, energies wasted and high achievers leave for pastures new, leaving deadwood and negative grapevine culture behind.
The Answer – Start your Post Acquisition Plan Sooner
A climate and business practice of prevention and planning to build and shape the new Business entity are critical. I have no doubt that the RBS new acquisition of ABN Amro is being as well planned and implemented as was achieved with the National Westminster acquisition.
I have no doubt that the General Electric empire will continue to acquire, sell and divest poor performers. It is stated that not a day goes by without GE buying or divesting of a business. Since the early days when Welch drove GE to become a leader or No. 1 or 2 in any industry, GE have perfected the M&A best practice.
Buyer’s Remorse & the M&A Challenge
The challenge is still bringing together two or more business to create a larger more successful entity that can function well in the future for shareholders, customers and staff alike.
The alternative is ‘Buyer’s remorse’ where Equity Groups, Acquirers and shareholders shake their heads in disbelief at the decision to merge interests.
2008 Challenges
M&A activity is declining, and it will be interesting to see how Jaguar Cars and Land Rover fare as Ford Motor Company appear to be near to selling these interests to Tata, the huge Indian conglomerate.
It’s the first time a huge automotive group has sold their interests to an operation based mostly in the Indian subcontinent – so it’s a matter of cultural change from a European perspective, to a cross border deal with a hugely expanding Economy.
Northern Rock
This and other fiasco's are proving to be interesting organisational dilemmas that have to be managed..
|
LATEST NEWS
Demystifying Matrix ManagementIt's the leadership, mindset and behaviours not the structure that makes the difference in making Matrix work More››
New Lean Experiential Matrix Management WorkshopsJuly 2008 in Milton Keynes and Edinburgh. Learn from others from different industries on the same journey More››
New Portal of Management & Business Games, SimulationsHighly innovative management games, simulations create results More››
Critical Strategies & Issues in Business TransformationKnowing the secrets that make strategic change certain More››
In your business what is the biggest most painful challenge, problem or issue...
Tipping Point: Overcoming Resistance to ChangeKnowing where to leverage change More››
Personaility Profiling - Coaching, LeadershipEmbrace the process and see value flowing to your business More››
Customer Focus. Live the Brand, Zero DefectsCommitting to quality and ZD still works More››
Leadership - the No Asshole RuleTake the ultimate test to see what sort of Leader you are More››
Discovery ReviewTell me to how to fix my business More››
Working Closely with our ClientsSeamless consultant client relationshiop leads performance More››
Coaching for ResultsMotivate. lead, cajole, partner but please coach others More››
Influencing MagicallyWhat more could you achieve if you had the power to influence More››
Interim & Search: Improve EffectivenessHaving difficulty filling that key role in your business More››
Buyer's Remorse & Post Aquisition DriftOnly buy that business if you know how to make the business grow More››
Poor PerformanceIn 93 poor performance was a key issue in Financial Services - updated article indicates 10% of staff as poor performers More ››
|