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Mergers and Acquisitions with a focus on merger integration

M&A Integration: Guided by Gurus (Part I)

4 Tips for Getting Out of the Starting Blocks

From my conversations with M&A integration gurus, I have four tips for improving your chances of merger or acquisition success:

  1. Invest the time upfront and get organized
    The gurus all agree!  Even if you don’t think you need it, create a formal program management structure. For starters, begin with integration teams, an integration management office, and a steering committee.
  2. Get your vision down on paper
    Clear and constant communication of vision, goals, and objectives can drive the integration and help you to stay focused.
  3. Ban “not invented here” thinking
    Is someone unwilling to consider an idea because it originates from outside of your organization? Fine them 10 bucks.  Reward people who leverage industry lessons, research integration best practices, or foster collaboration.
  4. Fly without training?
    It’s the best way to crash a plane… and may not work much better for your integration.  Every member of an integration team should be trained to understand their role and responsibilities. A 1-2 hour workshop can be enough to get you started.

This is an excerpt from the upcoming book, M&A Integration: Guided by Gurus written by Steven J. Ramirez. Steven is the co-founder of the Silicon Valley Integration Gurus(SVIG), a peer group of over 40 integration professionals working for companies like Cisco, Microsoft, Yahoo, and eBay. He is the President of management consulting firm Beyond the Arc, Inc.

The views expressed are solely those of the author and not of any member of SVIG, or their employer. M&A Integration: Guided by Gurus and this article are protected by copyright. (c) 2008, Steven J. Ramirez. All rights reserved.

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 bnet.com 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.

http://www.bnet.com/2422-13722_23-186403.html

Index to CNN Coverage of Mergers

Great interactive chart linking CNN reports on the largest deals done in 2007:

http://money.cnn.com/news/deals/mergers/dealchart.html

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.

Podcast: Bloomberg on the Economy

Bloomberg on the Economy

http://www.bloomberg.com/tvradio/podcast/ontheeconomy.html

Excerpt: FCC Approves $24.7B Acquisition of Alltel


FCC Approves $24.7B Acquisition of Alltel

 

The agency’s vote clears ways for the private equity buyout of the nation’s fifth-largest cellular carrier.

The Federal Communications Commission is approving the $24.7 billion private equity buyout of Alltel, the nation’s fifth-largest cellular carrier. With the approval handed down Oct. 26, Alltel expects to close the $71.50 per share deal by the end of November.

The FCC ruling determined that the acquisition would not result in competitive harm and that the additional capital provided by Atlantis Holdings would allow the company to acquire additional spectrum to expand its network. Atlantis is a holding company controlled by the principals of TPG Capital and The Goldman Sachs Group.

Read the rest of this eWEEK story: “FCC Approves $24.7B Acquisition of Alltel”

FCC federal government approves $24.7B acquisition of Alltel

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.

M&A Integration Woes Sink Level 3(LVLT)


Cowen’s Tom Watts today downgraded his rating on Level 3 Communications (LVLT) to Neutral from Outperform, noting that the company is taking longer than expected to integrate its recent acquisitions. (Among the company’s recent deals: the $45 million acquisition of Servecast in July, the $135 million purchase of the content delivery network assets of Savvis in January, and the $744 million purchase of Broadwing, also in January.)

“Customers continue to experience provisioning issues, suggesting LVLT’s acquisition integration challenges are continuing,” he writes.

He adds that “LVLT will have difficulty accelerating revenue growth as planned.”

There are a few more details on the Tech Trader Daily blog at Barrons:
http://blogs.barrons.com/techtraderdaily/2007/10/17/level-3-cowen-downgrades-on-merger-integration-issues/

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