Reasons Why Acquisitions Fail – 5. Flawed Corporate Development

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In my posting on 17 March 2013 I said that I would review and comment on Denzil Rankine’s 20 reasons why Acquisitions Fail

Rankine says that the reasons for failure fall sequentially into the five phases of an acquisition:

  1. Flawed Business Logic
  2. Flawed Understanding of the New Business
  3. Flawed Deal Management
  4. Flawed Integration Management
  5. Flawed Corporate Development

This article examines the fifth and final category in the list.

5. Flawed corporate development

You have successfully completed the deal, implemented your integration plan and taken control. How do you meld the two firms into one synergistic unit and deliver the long term benefits expected from the larger firm? It always comes down to generating a common direction and a common understanding of culture and values.

1. Have you made the right changes as part of the integration?

Do your changes deliver the commercial enhancements you need from the business? Is the bigger team stepping up? How do you measure the effects?

2. Have you merged the two cultures or ignored the differences?

For the integration to be truly effective people must work well together. Have you addressed any cultural differences?

3. Does your integration plan include your customers?

Don’t fall in to the trap of focusing purely on the internal reorganisation. Customers will walk away if they are left out of the loop.

4. Have you planned for how you will run you own business during the acquisition?

Significant resources will need to be diverted to acquiring and integrating a new firm. How do you plan to ensure your existing business continues to function smoothly during this period?

Too often, cultural differences, unhappy customers and problems at home caused by “taking your eye off the ball” can cause the failure of both the acquiring firm and the newly formed larger entity. Sacrificing the As-Is often leads to a failure of the To-Be.

About Peter Borner

Peter is an entrepreneur and successful business leader. Currently leading a consultancy firm specialising in technical diligence for M&A and advising global firms on IT consolidation and migration to consumption based costing through the use of Cloud Technologies.

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