Mergers & Acquisitions = Marriage & Acceptance

Imagine that you meet someone. Imagine that you fall in love. Imagine that you decide, that together you are better, more complete, greater than when you are apart. So you decide to get married.

So far so good. You look at your possessions and your expense. Each of you have a place of your own. In your respective homes, you have the following: satellite/cable, local and long distance phone, internet, water, electricity, TV, couch… oh and of course the mortgage or rental feels.

Are you with me? Good. So you decide what any smart couple would do… you agree to keep things as they are, pay all the redundant services and say no to the opportunity to improve as a result of this combined union. You, in effect are saying no to the concept of "economies of scale and scope."

Yes, this is asinine. Plain stupid. I mean, who would do that? Who I ask you?

Try this for size: the overwhelming majority of large corporations that acquire companies. The lack of integration is criminal. The acquirer and target seldom integrate their back office solutions (ERP, etc), their policies and processes. They continue to work as independent companies within their own silos. Then everyone wonders, why didn't we get the value that we thought we would get?

Leaders have the foresight to understand the true benefit of the merger. It is not that 1 + 1 = 2 , but rather 1 + 1 = 3. Yes, you did the math right. The combined company is now producing something that they individually would never have been able to produce. Unfortunately, most acquisition generate this equation: 1 + 1 = 1.5. In these cases, the acquisitions destroy value. They don' t create value... and to compensate for this missed opportunity, the organization resturctures and everyone forgets that bad episode. After all, there's a hot acquisition prospect in the horizon... it's a no brainer!

I'd love to hear stories about acquisitions that you've been a part of or have witnessed.