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Mergers & acquisitions: promote growth, not just headaches

CharyChigurala| May 4, 2011
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Mergers and acquisitions are considered the fastest way to grow companies. Many get on the bandwagon without thinking hard about the target companies and the potential benefits. No doubt, the whole thing is also complicated by the middlemen who try to push the deals for their own vested interests. As a result, most mergers fail due to lack of cultural fit while some fail due to poor execution. Just to meet the regulatory deadlines, some companies somehow try to finish the project, doing a half-baked job, which creates many issues down the lane.  

 

The M&A cases can be filled with a lot of uncertainties. Firstly, the acquiring companies often don’t know much about the target company operations. With limited information, it’s pretty hard to make any realistic assessment of the merger benefits.  

 

A CEO of a very large Asian company admitted that they were acquiring companies all over the globe right, left and centre. When they acquired a company in Europe for instance, they completed integration quickly from a regulatory perspective, but silos of culture still persisted. The CEO was furious that the company couldn’t answer simple questions like ‘what are the top 20 projects?’ or ‘who are your top 50 most valuable customers?’ It can take an awful lot of time to answer simple questions. On top of that, he complained that most technology vendors offer solutions like cloud computing as a panacea to all problems. He expects a merger model that is not a ‘me too’ solution, but is one that truly differentiates their business. Those are reasonable expectations on the part of the CEO.

 

HP has gone through 40 acquisitions in the last 5 years and gained significant insights on how to integrate companies effectively. HP in fact helps clients set up an ‘Integration Factory’ in tandem with ‘Shared Services’ that makes M&A strategy a solid growth engine.  

 

Hewlett Packard, having completed multiple mergers and acquisitions, has a kit bag of lessons learnt, which are repeatedly applied in a number of client environments. For example, quickly bringing the business operations to a normal status or realizing the planned synergies rapidly. In this journey, HP made many mistakes, the learning’s of which are offered to clients.

 

HP is launching a newly formed Strategic IT Advisory Service (SITAS) to offer M&A services and help clients manage their fast growth. SITAS will channel HP’s practical insights and help clients avoid ‘EPIC integration failures’.

Tags: integration planning| M&A playbook| Pre-deal due diligence
Labels: IT transformation| M&A| Strategic IT Advisory Services (SITAS)
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