Mergers and Acquisitions with a focus on merger integration

Keep your options open with loosely coupled deal integration

It’s a chief development officer’s nightmare: complete a costly, complex, lengthy and emotionally challenging integration
of a major acquisition, only to have the board decide to sell (or shutter) the operation after a few months of further study.
Sadly, technology industry business strategy is evolving so fast nowadays that this nightmare scenario is increasingly likely.

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Maintain Strategic Flexibility [PDF]

HP vs. Autonomy: Lessons for acquisition integration?

See on Scoop.itMergers, Acquisitions: Integration Strategy and Tactics

There has been a great deal of acrimony between Hewlett Packard CEO Meg Whitman and Autonomy Co-Founder Mike Lynch. At Issue is whether the audited financial statements gave an accurate portrayal of Autonomy’s business. HP took an $8.8 billion charge and raised the possibility of potential criminal activities.

What went wrong? In a blog post, industry analyst Rob Enderle provides his take. His bottom line:

“The issue between Autonomy and HP is largely the result of both the buyer and the seller thinking tactically.”
See on

For an overview of the recent press coverage, check this story from The New York Times

Handicapping Deal Success

M&A consultant Dean McCauley predicts the likely success of three mega-deals by comparing the intent of the deal with the integration strategy. Beware when these are not aligned.

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Can Acquisitions Pay Off?

Extensive research by M&A consultant Dean McCauley reveals that by building a repeatable process based on best practices, companies can turn serial acquisitions into a dependable, successful source of growth.

Download the research report the Successful Merger B.pdf

Does the Stock Market Hate Acquisitions?

Acquisitions can have an uncanny ability to destroy value. Is it, as Forbes contributor Freek Vermeulen asserts, that Wall St. generally hates acquisitions?

Vermeulen’s article goes on to show that not all acquisitions are created equal. Merger integration, particularly cultural integration, is key. He notes:

Acquisitions are just very hard to do. They usually are fraught with information asymmetries; basically most firms don’t have a clue what they’re buying. And due diligence is not going to solve that problem; acquisition integration is often hampered by cultural differences, incompatible systems and plain mistrust – something you don’t just look up in the company’s books beforehand. Hence, the troubles are hard to avoid.

Getting to know a potential target via a strategic alliance is a great way to reduce the risk of M&A. But, what if you haven’t had a chance to form that alliance and still want to do the deal?

A well planned integration that begins with a comprehensive readiness assessment and cultural benchmarking can be good alternatives to consider.

Is the MySQL Acquisition Changing the Culture at Sun?

On January 16, 2008 Sun Microsystems made this deal announcement:

Sun Microsystems Announces Agreement to Acquire MySQL, Developer of the World’s Most Popular Open Source Database
Sun Growth Strategy Accelerates With New Position in $15 Billion Database Market

SANTA CLARA, CA January 16, 2008 Sun Microsystems, Inc. (NASDAQ: JAVA) today announced it has entered into a definitive agreement to acquire MySQL AB, an open source icon and developer of one of the world’s fastest growing open source databases for approximately $1 billion in total consideration. The acquisition accelerates Sun’s position in enterprise IT to now include the $15 billion database market. Today’s announcement reaffirms Sun’s position as the leading provider of platforms for the Web economy and its role as the largest commercial open source contributor.

Sun’s full press release on MySQL is available here.

There was a great deal of concern in the developer community that this was an attempt to undermine open-source software. Sun, long known for its strong advocacy of its proprietary technology, was viewed with suspicion.

Charles Cooper’s CNET blog has provided an interesting update on this merger integration. MySQL may in fact be a catalyst to change the corporate culture of the acquirer. The article notes:

During a break [at the recent MySQL Conference & Expo], I ran into a Sun employee who told me the question really wasn’t whether Sun would change MySQL but just the reverse. “It’s MySQL thats changing Sun’s culture,” said the employee, who didn’t want to speak for attribution. “In the past, we had all these silly fights by being proprietary. But that’s history.”

It is no surprise that M&A has the power to transform; this will be an interesting development to watch.

M&A: Executing the Merger

CNET Networks has launched a new business channel, BNET. On the website they present a 3-part video series on managing mergers and acquisitions. Merger integration consultant Steven Ramirez, Managing Partner at consultancy Beyond the Arc, covers the Top 5 Mistakes to Avoid in managing integration.

AMD Acquisition of ATI: A Case of Indigestion?

Has AMD’s acquisition of ATI made it a stronger player in the semiconductor industry? Or, have they stumbled in managing the merger integration of the two companies? This report from Dow Jones raises some interesting questions:

UPDATE: AMD Still Digesting ATI Merger, But Some Predict A Comeback

Dow Jones

SAN FRANCISCO (Dow Jones) — A year after gobbling up ATI Technologies, Advanced Micro DevicesAMD" > Inc. is still reeling from indigestion, and analysts say it remains to be seen if the $5.4 billion deal was worth it.

Still, many are positive on the deal’s long-term potential, especially as it may give AMD (AMD) a much-needed boost in its bitter battle with arch-rival Intel Corp.

Two weeks ago, AMD reported a $396 million loss for the third quarter, weighed down by a $120 million charge related to the merger. That stands in sharp contrast to the 43% jump in earnings at Intel (INTC) for the same period.

AMD’s stock has also underperformed, losing about 35% of market value so far this year. Intel shares have picked up nearly 30% for the same period.

The article quotes an industry analyst who notes:

In a research note last week, Freedman predicted that “the logic of the AMD- ATI integration will be begin to bear fruit” closer to 2009. That’s when the company plans to launch a line of more sophisticated computer chips, as part of its Fusion program.

Is the downturn in AMD’s fortunes a result of an acquisition gone awry (and the problems with merger integration)? Graphics chip maker Nvidia has seen its stock decline in 2007. Could it be that the graphics chip market is to blame?

Doug Freedman of American Technology Research concludes:

“the logic of the AMD- ATI integration will be begin to bear fruit” closer to 2009.

It will be interesting to do the post-mortem on the deal at the close of 2008.

Acquisition Integration Via Simulation-based Seminar

From a recent press release, an interesting approach to training managers how to manage acquisition integration:

Tata Interactive Systems launches a simulation-based seminar solution to enable successful mergers

Many M&A executives recognise the importance of the ‘soft’ aspects of the integration process – aspects that deal with communications, organisational cultures and structures and so on. Yet too many companies are under-prepared to deal with these aspects of an acquisition.

To help combat this, TIS has extended the range of its TOPSIM® workshops to address specific postmerger integration (PMI) issues. These PMI workshops guide participants through a series of post-merger scenarios, posing particular challenges in the areas of integration planning, expectation setting, organisational culture and communication.

Manoj Kutty, TIS’s president, simulations, commented: “TOPSIM is a management development simulation that was developed over 25 years ago and is now used by over 100 companies and 400 universities worldwide. TOPSIM simulations, deployed in a blended workshop setting, offer the participant an in-depth understanding of functional skills along with managing the business operations within an industry such as banking, insurance, retail, and pharmaceuticals.

“It’s about learning business by doing business – and, where the PMI workshops are concerned, providing a critical learning path for business integration managers.”

Read the full press release

M&A Integration Consultants

Beyond the Arc

For information on Acquisition Integration

A management consulting firm specializing in mergers, acquisitions, M&A integration, postmerger strategic planning, technology mergers, media mergers, and other areas of M&A practice.


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