Acquisitions - Avoiding the failures (2)

I advocate a structured approach to the assimilation process: -

Ascertain and quantify the strategic objectives through the acquisition and identify the key value drivers of the target

This will enable you to focus on the value critical areas.  This may comprise, for example, increasing market share or buying power by the acquisition of a competitor, or increasing efficiency/margins through know-how or technology, or an additional product range that can be introduced to an existing customer base.

Appoint an Integration Supervisor

The Integration Supervisor should be a senior member of the acquirer’s management team.  It will be his/her role to plan and direct the process and report on progress.  They will be accountable to the board for its success or failure.  Following the acquisition they will appoint teams in key departments, to manage the integration process.

Formulate an outline integration plan

This will often include office relocation, training, introducing a management succession programme, integrating reporting/IT systems, rationalising combined overhead base and developing a cohesive marketing plan.

I am aware of one recent major corporate takeover where some considerable thought and planning went into the integration process.  Unfortunately this involved many “jobs for the boys” providing the plum positions to the acquirer’s staff and leading to much resentment and demotivation amongst senior target staff.  Although this is common (the spoils of war) and it is too early to see the effect of this on performance, I would expect to see a significant number of defections to competitors in the short-term coupled with a considerable loss of business in the medium/long-term.