Acquisition Tactics Fall on a Spectrum- Companies Take Different Views on M&A Success

Andrew Hill indicated recently at The Financial Times Online that, “If there is one truism in mergers and acquisitions, it is this: the success of the deal depends on the success of the integration process. This, in itself, hinges on the fit between the two companies’ cultures ­— particularly with the dreaded ‘mergers of equals’ ­­­— and the amount of preparation that goes into the deal.

“Although big companies have improved their integration skills, about half of acquirers underperform and staff affected by the process suffer from disruption and anxiety. Furthermore, the critical question of how quickly and how far the integration should go remains open for debate.

“The answer seems to have shifted over time. US technology group Cisco was once the champion of rapid integration, but it has gradually become more inclined to maintain the identity of its acquired companies.”

The FT item indicated that, “There are still examples of take-no-prisoners integrators, however — global brewer Anheuser-Busch InBev is a prominent example. Vicente Falconi, the Brazilian consultant and longtime adviser to the group, once told me that the arrival of InBev managers at Anheuser-Busch, after the Budweiser-maker’s takeover in 2008, was ‘like a military disembarkation.’ Efficiency and margin improvement were the occupiers’ objective.”

Mr. Hill also pointed out that, “Nuno Fernandes, professor at Iese Business School in Barcelona and author of The Value Killers, a book about M&A success (and failure), says acquisition tactics fall on a spectrum from ‘bulldoze’ to ‘leave alone.'”

“Entrepreneurs may not care about the trappings of corporate life or wish to attend bureaucratic meetings organised by their new masters, but they will want to have the right to be there when decisions are made about whether or not to bulldoze their beloved babies,” Mr. Hill said.

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