What’s the best approach to acquisition integration? Depending on whom you ask you will get very different replies, and some of the best advice comes from those who have bought and integrated dozens of organizations in their careers. A group of experienced CEOs with a long pedigree of acquisitions got together in 2000 for a roundtable discussion in Scottsdale, Arizona.
While everyone agrees that acquisitions and integration pose considerable challenges, the real driver behind M&A is that it presents a much faster route to business growth than organic growth, and speed is of great value in this fast moving global economy. But if the acquisition gets bogged down in internal issues, mass defections of talent, and too much focus on positions and politics, then growth can suffer and the benefits of the acquisition are difficult to deliver.
One of the best ways to ensure the acquisition delivers on its growth opportunities is to use an in depth understanding of the cultures of both companies as a guide on how to approach the integration. When the internal ways of working (cultures) are similar, it can make sense to use an assimilation strategy for the integration.
When the cultures are very different, yet there is a good business rationale for joining forces, there is the option of allowing it to maintain its identity as you slowly begin to build trust and understanding of the people and their capabilities and learn how to best leverage this new acquisition for the benefit of everyone. The Disney acquisition of Pixar is a great example.
And every once in a while, an acquisition comes along where 1+1 = 3 and there is the ability to take the best elements from both organizations to create a new entity whose combined power becomes a significant competitive force. The successful merger and integration of Exxon and Mobil, to form ExxonMobil, the largest corporation in the world, is a good example.
For years I have used this chart when a CEO and I are in discussions about a potential merger or acquisition. It adds the cultural dimension to the discussion and often leads to fruitful and otherwise overlooked insights.
(Note: this article is adapted from LEVERAGE: The CEO’s Guide to Corporate Culture, by John R Childress and available in paperback and eBook formats on Amazon.)
See the review of LEVERAGE in The Economist (January 9, 2014.