Posts Categorized: Mergers and Acquisitions

Acquisition Trends for 2011 and Why Groupon Rejected Google’s $6 Billion Acquisition Bid

In this issue we first take a look at the active sectors for acquisitions in 2011 and what the drivers are for this broad upswing.  Then, before you get too comfortable in the mainstream view of things, we make a departure to glimpse on the impact of the emergence of new, dynamic firms on what… Read more »

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Google’s Acquisition Bid for Groupon Takes Us To The New Reality

On rare occasions a clearly spectacular and indicative acquisition bid gets underway. Google’s offer to Groupon for $6 billion is definitely in that very special number. A Groupon acquisition has the makings of being as a true game changer that goes far beyond the usual case for growing increased scale or expanding market possibilities. It is those two, but much more.

Aside from the eye catching amount of money involved, there are important lessons for any company considering an acquisition or that might become a target. The obvious thing is that Groupon is such a pure capabilities and intangible assets play. The noteworthy thing here is that highly valuable intangible and capabilities can often be found, if in lesser degrees, in the embedded special knowledge and capabilities in any acquisition.

Because of this, the extraordinary acquisition offer for Groupon, the start up online discount coupon company, is well worth our attention. This is not only because that this is a larger than life story, but also because we can learn such a tremendous amount from it.

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$3 Trillion in New M&A’s + Springboard #1: Identifying ther Customer Strategy for Your Newly Combined Company

The New York Times DealBook has commented that “The recent rebound in mergers and acquisitions is expected to strengthen significantly next year, according to a new report, with global deal activity on track to rise 36 percent, to $3.04 trillion.” The pace is picking up. But are we just repeating the cycle with the same approaches and practices?

Springboard #1: Your New Customer Strategy
Setting in place the right set of springboards is necessary if an acquiring company wants to achieve a quantum leap integration. The first springboard involves identifying your renewed customer strategy and building your brand framework from that. Your new customer strategy should outline how your company will provide value to different segments of your customer base. It should identify the brand experience and levels of customer relationships that your company is seeking to obtain.

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Springboards for a Quantum Leap Integration

After the acquisition is signed sealed and delivered, integration planning turns into integration execution. For a company to be extraordinarily successful in the outcome it needs to maintain a strong focus on cultivating its core capabilities and use them as enablers to power that six springboards will move the newly combined company to the next higher level of performance.

This is the first of a series discussing these six springboards.

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Southwest’s Acquisition of AirTran – An Opportunity for Quantum Leap Outcomes

After Southwest Airlines reached the limits of its organic growth, it moved to acquire another low cost carrier, AirTran, which makes it a truly national carrier with significantly broader geographical reach and large groups of new customers. It also sets up Southwest to be in fully competition with other major carriers in the US and the Caribbean.

This major acquisition is both a great opportunity challenge to Southwest to keep to what has made it a successful and relatively unique company as it moves to its next level of development as a significantly larger airline. If Southwest cultivates and brings to bear the six core integration capabilities it has already nurtured, it can use this acquisition as a window of opportunity to achieve quantum leap gains hat is of value as it remakes itself into a fully national and international carrier.

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M&A is Not a Strategy – Taking a Look at Intel, and Hyper-Social Organization (con’t)

The “aha” insight here is that the real basis for success, or failure, for companies taking on major acquisitions is whether they take on the challenge of making the necessary leap in imagination and embody a will to change. In the end, it may be this lack of willingness of acquiring companies to recast themselves that is the real cause for the high failure rate for acquisitions – that is, a failure to meet expectations and performance levels. This can quickly change when a company becomes honest with itself about how much they are willing to transform their basis of operation as they move forward to take on these major acquisitions. Their willingness to change has to be at least equal to the scale of venture they are in the process of carrying out.

Also, in Part II of the conversation on the Hyper-Social Organization, explore on how a company migrates from being a collection of “business” processes to becoming a network of “social” processes.

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Integration 2.0 – Beyond M&A Post Merger Integration

The M&A scene is ramping up in the greatest volume in three years as companies find the extensive amounts of cash they have stockpiled needs to be put to better use than stock buybacks and higher dividends. Since firms have cut back as far as they could they have pared their R&D and growth initiatives. Acquisition seems an imperative to develop additional revenues and ROI. But these overly trimmed firms may face a quandry since they have cut so much that they do not have the people or culture to support healthy integrations and related innovations that will create value.
At the same time new approaches such as The Hyper-Social Organization are being developed that give us ways to change how we work and think about organizations, customers and networks. These particular approach brings the human being back to the center of the equation, both inside and outside the organization – with social media as the vehicle to build connectedness that both changes the organization and leads to a people lead growth mode. The blog will publish segments of the conversations with co-authors Francois Gossieaux and Ed Moran about the premises, principles and practices of this approach, and in particular how it relates to acquisition integration.

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The World of M&A Integration 2.0

We are moving into an era of M&A Integration 2.0. The developments of technology and a shift in attitudes now gives companies considering major acquisitions the chance to remake their approach to acquisitions to make it more inclusive, collaborative, quicker, more coherent, all with a greater possibility of remarkable quantum leaps in value creation. But technology is the tool, not the master. Never forget that the greatest tool for acquisitions and integrations is your collective organizational brain. You are the guiding actor in this complex undertaking. At the same time make sure you take advantage of the reduction in cycle time, gain in value creation and power of the emerging array of strategic tools as we move into the Integration 2.0 era.

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Recognizing and Reconciling Cultural Dilemmas

This first article in this Newsletter is a set of observations from my November trip to
Shenzhen, China for a Knowledge Cities Summit and to neighboring
Hong Kong. The second article is a conversation with Euan Semple, a leading
advisor on the design and implementation of social media tools in
business on using social media tools to enhance flow of critical knowledge in post merger integrations.

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Culture Issues Involved in Acquisitions and Integrations

Culture issues are involved in all acquisitions and integrations.The first article contains highlights the culture challenges Chinese companies have to resolve in cross-border acquisitions. In the second article Maarten Nijhoff Asser of THT Consulting, focuses on a framework to reconcile cultural dilemmas in an integration.

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