Alzira Salama, Wayne Holland and Gerald Vinten
There are certain important issues to be considered when implementing an acquisition or merger process, that are most of the times not taking into account as a crucial part for the success by key managers in both organisations. It is usual that the decision for merging or acquiring another company is driven by financial expectations rather than for a learning opportunity in multiple areas. The creation of value is extremely important, and can only be achieved by people, when they share knowledge, skills and collaborate in order to create benefits and work for a better future for both companies, which in the long term can become a very important competitive advantage for the company that will be difficult to copy and overcome by its competitors.
An acquisition and a merger, can be seen from the point of view of a marriage, and if we analyse it this way, one can get to see that there are going to be some opportunities
to take advantage of, and of course some challenges that must be overcome in order to work efficiently. In that order of ideas, if we are talking about a successful acquisition, one must say that it implies the fact of an effective integration between two companies into a single group that will work together and joint efforts in order to achieve the goals for the new organisation. It is exactly the same as a couple who is getting married and is combining efforts and skills in order to make their union work and improve their lifestyle and to assure a better future together. Some key opportunity points that an acquisition process offers are:
- Learning: There is a huge opportunity in this sense, to learn and improve processes by learning from the other party in what they do best. In this way, both companies are being benefited in different areas, and that will help them to get better as a whole. For instance, that is one of the opportunities of the Volvo-Ford acquisition, employees and engineers from Volvo taught and shared knowledge regarding safety and ergonomics with the employees working in the US in the Ford section. On the other hand, employees in Sweden feel more attractive to the dealer market now that both companies are working together since they are learning from Ford in this field.
- Renew market position: For instance, when a company wants to enter to another country, this is a good way to achieve that faster in a successful way, because the acquired company is already known in its home market, it knows the customer better than the new company, its prefferences, what they dislike, etc.. They also have a supply chain and a distribution chain with them (if applies) and have many advantages that can be passed to the new company. Is not that much about the physical assets but about the knowledge.
- Create a new and strong cultural organisation: By unifying the best of both companies and learning about each other's values and beliefs, better business practices can be achieved and implemented and in the long-term they would become a very important competitive advantage for the new organisation that will be difficult to imitate by the possible competitors.
- Create potential synergies: Can lead to a superior performance, but, in order to do so, one has to trak and do a post-acquisition work with the employees of both companies, because there can be a series of conflicts among them in which they will call themselves "us", the other party "them" but there has to be a work in order to achieve that they call the new organisation "we".
- Create a common identity or culture: Is difficult to reach a point where employees from both companies, that are usually from different countries or regions will consolidate a common identity, due to the idea of losing their own national or even organisational identity and accepting the other partie's one. There has to be a communication effort from managers in order to show them the importance of the other company for them and how being integrated could result in greater benefits for both parties.
- Integrating in terms of management and physical assets: The integrating process itself is a big challenge for the main executives in charge, because they have duplicated management and assets from which they will have to choose from, it is more likely for them to choose the best one of each but since the integration team is formed by executives from both companies, to reach a consensus in this phase could be difficult, so what is best is to be very objective and less subjective, leave emotions and affect to one's assets behind, but it is not an easy task. Like in a marriage, it is not easy to say that one is leaving the house for which worked so many years to buy it and worked so hard decorating it, in order to go to another one that might be bigger or prettier, there are sentiments attached to physical assets and of course to people.
