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Entries in Mergers (1)

Sunday
Nov012009

Mergers and Acquisitions

“This is a good old fashioned strategic merger.” I heard those words from the Chairman of the Board in 1990 while working for an office products company. 20 years later, this company’s headquarters building is condominiums.

Companies they had “acquired” over the years heard the same thing…and suffered similar fates.

So while the trends I’ve observed in nearly every combination may not be faithfully generalized in all cases, they are a synopsis of what I’ve personally experienced.

Kelley’s Humorous Laws of Mergers

  1. Mergers are a legal/tax framework. There are only acquisitions.

  2. The acquiring company is the “winner.” Their self image is one of a brilliant staff, and they do many things correctly.

  3. The acquired company is replete with cost savings opportunities. The staff is expendable, and made many errors leading to the company’s demise.

  4. “We will examine all systems and chose the ‘best’.” This is management-speak for saying we will choose one infrastructure and migrate everyone to it. It would take too long to interface disparate systems for the perceived functionality gains.

  5. Some companies let acquisitions run autonomously. This is typically until the senior execs or family selling the company retire and is solely meant to placate the prior ownership.

  6. Companies acquiring aggressively are prime acquisition candidates. Areas not fitting strategically will be divested. “Management buy outs” indicate a non-strategic area, or an area the acquiring company didn’t choose to understand or develop.

  7. Divergent company cultures are often the most challenging areas in an acquisition. Company cultures often reflect the stereotypes of the geographic region.

  8. The first system deployed to newly acquired companies is often expense reporting.

If you work in a recently acquired company, be positive and upbeat and try to make the new organization work. Keep your eyes open, and prepare for a possible plan B (if only updating your resume.)

You could read into this I am against acquisitions. I’m not; the office products manufacturer referenced in the story open was facing a rapidly consolidating retail market (birth of the office products superstore) and wouldn’t have otherwise survived. The acquisition allowed staff the opportunity to gracefully find opportunities rather than suffering through a company agonizingly ceasing operations. Change is inevitable, and an acquisition is simply another change.