Unfortunately, often times the typical M&A strategy of a company is focused on getting the deal done. There are the tough negotiations, the emotional roller coaster, the communications wrangling and finally the big day is here where the leaders smile into the flashlights of the cameras!
And then the next day starts and the big questions for the teams on either side of the acquisition are how to work together? To answer this question right is critical for the value creation as most of the deals fall short to materialize the anticipated value because of lack of strategic design of the merger.
Our team at ECSI Consulting has experienced the acquisition cycle many times from both sides of the table and we worked extensively on developing an effective framework for Post M&A strategy which is particularly useful in cases of small-medium size acquisitions aimed at delivering capabilities and market synergies, more than efficiencies. This framework is based on the academic work of Professor M. Zollo at INSEAD.
There are generic archetypes of integration strategy depending on the source of value. E.g. If the value is in exploring a new domain via a new interesting technology or new product, then try to Preserve.
Once the most apprioriate archetype is selected, three dimensions need to be taken into consideration:
- Scope – how far to go in merging structures, activities and cultures (in breadth, across functions, countries or divisions; in depth, from linking structures to merging identities);
- Style – how much to invest in the quality of the relationship between the two companies (amount of consensus sought; retention/replacement of overlaps);
- Speed – how fast to make decision and implement the changes.
Cisco Case Study
Acquiring other companies is important for Cisco to reach new products and add new technologies. Since 1993, Cisco has acquired more than 120 companies, from small startups to medium firms (e.g. WebEx). Cisco created a consistent, repeatable, and adaptable M&A approach, which can be seen in action when they acquired Linksys for $500M.
Interested to hear more?
Contact Alessandro today and learn how to strategize the integration of your next target acquisition.
Tel: +39 02 36723950