1817
n
Making far-reaching decisions
reduction of over-capacity (think for instance of Daimler and
Chrysler). Sometimes acquisitions enable a number of companies
to join forces, and benet from some shared operations while
remaining relatively autonomous (think for instance of Johnston
Press, buying scores of local newspapers). Other acquisitions are
intended as some form of substitute R&D (e.g., Cisco buying
scores of entrepreneurial companies in Silicon Valley). Some
acquisitions enable a rm to gain access to a new product or
geographical market (e.g., Heineken buying local breweries),
while yet others have to do with blurring industry boundaries
(e.g., the various industry conglomerates, such as Viacom).
Thinking that you could just treat them all the same way seems
a bit naïve.
Now, it is of course true that, in all cases, you should “have a
good communication plan”, “integrate carefully”, “make sure
to not over-pay”, and so on. But this type of advice is also a bit
of a motherhood; after all, the professional life of a consultant
(or strategy professor) recommending companies to “integrate
poorly”, “make sure you over-pay” and “have an appalling
communication plan” would likely be swiftly truncated.
So what can you recommend? Well, rst make sure that you
understand what type of acquisition you’re engaged in or, put
differently, exactly why you are considering buying the company.
What is it that is supposed to create all this surplus value? Once
you have gured that one out, you might be able to deduce what
can or needs to be preserved in the company, what needs to be
integrated and what can be left to its own devices. Dependent
on the outcome of that exercise, you can start to devise a further
acquisition plan including, yes, a good communication plan, a
careful integration approach, and a proportionate acquisition
premium. And perhaps even a consultant.
Not all trouble is really trouble
While we are still on the topic of acquisitions, let me tell you
another true story. Some time ago I was talking to a CEO