Mergers, Acquisition & Failures

In the past year, we’ve seen a lot of mergers and acquisitions. A HBR study states that 80% of such mergers and acquisitions will fail. How can we ensure that these mergers are successful? In this video, we offer an option - use models.

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Last year has seen lot of mergers and acquisitions – around $2.4 trillion. To get an idea of how much money this is, if you stack up a $2.4 trillion in $100 bills, it will stretch from Washington DC to Denver!
These M&As were to done for various reasons: (1) tax avoidance in the US, (2) crushing the competition, and (3) complementing capabilities to grow. Let’s talk more about the third reason.
The merger itself is a business decision – but what needs to follow is a plan on the mechanics of how the merger will happen. Functional areas have to be merged, business processes merged, people reallocated, IT systems made to work with one another, and so on, all while preserving the combined company's competitive advantage and leveraging their respective strengths. This is tough.
According to a HBR study, failure rate of mergers and acquisitions is about 80%. In 2008 Bank of America was forced to rescue Merrill Lynch for $44 billion, but that was painful at best, with long lasting implications, including the CEO of BOA at the time, Ken Lewis, losing his job. The cultural clash was one of the main problems.
In 2004 Commere One, a high-flying internet company filed for bankruptcy after an acquisition failure. The company had many applications running on different platforms and technologies. Customers wanted to integrate across those applications. So Commerce One acquired a platform company. However integration with the platform was difficult to accomplish, leading to the company's demise.
How you want to integrate the two businesses depends on your intent. To improve your current business’ effectiveness, you could dissolve the acquired company and fold its resources into the main business. Cisco’s folding of Webex for its technology in 2007 was a great success, while Chrysler’s acquisition of Daimler’s in 1998 was a colossal failure though both did similar things. Why? At the time of acquisition, Chrysler’s whole system was modular, and could reconfigured pretty quickly. Daimler’s system however we monolithic. Integrating the two was too difficult at multiple levels – people, process, technology and culture.
Leaders needs to use models as a basis to understand the impacts and implications of mergers and how to design the new organization. Models can help to answer questions like..
- What are the areas of critical focus?
- How do we retain competitive advantage?
- How to scale?
- How to identify the need for new capabilities?
etc

Models drive successful mergers and acquisitions.

[Detailer_IY]

Why is there dislike, thanks for the video trump

[BR_]

sir, i have a doubt that now halli labs was acquired by google in this case the employees in halli labs, what will be the designation company for halli labs