When Acquisitions Fail
I've been reading Leonard Fuld's The Secret Language of Competitive Intelligence, which is very good reading - almost like a mini-MBA in 283 pages. There were sections I actually found gripping - mostly the chapter where he writes of pitting a team from Harvard B-School against a Sloan/MIT team in a war game in which the teams assumed the identities of Microsoft, AOL, Google, and Yahoo. As Fuld writes, "a lot of pride was on the line." I had to contain myself to read through and not flip ahead to find out that the team from Sloan won. Yea, team!!!
In addition to providing some tremendous examples of thorough competitive intelligence, and useful tips on how to go about getting it (and using it), the book is studded with good business, marketing, and strategy points.
I'm sure I'll be citing other parts of the book over time (both here on over at Opinionated Marketers), but I was especially struck by Fuld's discussion on failed acquisitions.
Think of the many disappointing acquisitions in recent years that were driven by the numbers and in the name of enhancing shareholder value...Grant Thornton LLP, the British-based international accounting and consulting firm, studied merger failures and concluded that beyond the numbers, three important soft intelligence criteria dominated: (1) accountability for postmerger integration plans and implementation, (2) the strategic rationale for approving the merger in the first place, and (3) whether the culture and the people of the firm with whom you merge fit or are polar opposites.
Okay, so maybe this comes under the heading of "no shit, Sherlock" for everybody else, but it got me thinking about one of the grow-by-acquisition companies I have worked for. (There've been a couple.)
I joined Softbridge when it was well on its way to NOT becoming the "Next Billion Dollar Software Company" that it claimed it wanted to be. When I started at Softbridge, it was already an amalgam of quasi-integrated tiny-little-companies that weren't especially integrated, and for which there did not seem to be any particular rationale - strategic or otherwise. (Other than, I guess, the notion that if we joined up with 1000 $1 million dollar companies we would, indeed, become a billion dollar company.)
Let's see if I can remember who and what we were . We had a maritime logistics software company. A maritime data analytics company. (Stop: you're trying to detect a pattern. Don't bother.) An accounting software company. Financial planning software. Decision support consulting. Development tools.
Nominally, what all our bits and pieces had in common was use of the PC. Occasionally, we pretended that all of the software products shared a common platform, but this was wishful thinking once you looked beyond the PC itself. There was absolutely nothing that the disparate little companies that made up Softbridge had that was "synergistic" (another little fib we kept telling ourselves). Each company-ette within the Softbridge family served an entirely different market, with entirely different products. Occasionally cross-sell, up-sell opportunities, but that was about it.
How'd this all end up?
After I was there a couple of years, a turnaround guy was parachuted in. First act in office: start to get rid of all these odd-ball little companies that had no business being together in the first place.