Why do we need to applying knowledge and intangible assets the acquisition process?
1. 80% of most acquisitions fail to meet the objective for which the deal was done.
2. A failure to see "intangible" assets - The leaders of the acquisition may not "see" the nonfinancial aspects of the knowledge merger.
He shared a story about a failed acquisition and the lessons learned from the process.
3. Many great organizations are wasted
4. Painful for the people involved
5. Good intention often thwarted by the 'conquistador' syndrome
6. Mistakes are often repeated
Anatomy of an acquisition:
Due diligence - often does not happen from a knowledge perspective
At this point, the integration phase begins...
Hubert shared a story about how they used collaborative tools in the due-diligence process and the outcome of a 7 billion dollar deal. (Worth listening to the conference tape)
- At any time, you are either an acquirer or a target (or both)
- The companies that have cultivated the right capabilities will have the most success at integrating
- Building readiness for integration consists of developing a core set of capabilities to leverage the integration
-Leadership trust and partnership are key to integration success.
Very often acquisitions are led by the finance approach - the expense synergy approach - which looks at cutting expenses.
A different approach is to not touch the acquisition -- the growth synergy approach.
Hubert proposes that he right approach is the value creation approach, which looks not only at the financial details, but the knowledge exchange to transform both the acquirer and the acquired. This will contribute to long-term value creation.
Dimensions of Integration Capability
1. Defining the strategic context for the acquisition and selection of appropriate candidates
2. Carrying out the due diligence process and negotiating a deal that will create value commensurate to the risks involved.
3. Building the business plan that will realize the targeted expense and capability synergies
4. Carrying out the integration plans in such a way as to realize fully short and long term potential benefits of the integration.
Presented a Value-creation Matrix with his ideas on value creation through complimentary capabilities in order to improve acquisition readiness and value creation.
The value creation approach is based on the exchange of knowledge through in-depth conversations that...
Treat people with respect
Build partnerships at all levels
Develop high levels of trust across both companies
Elicit a sense of commitment and ownership
Allows change to happen with speed
Several other excellent slides - see deck.
The key to success is to transfer knowledge during the transition and integration phases while preserving good, eliminating duplication, and creating value in the integration phase. What began as a discussion that one might expect to lead into financial discussion, ended by making a very compelling case for ongoing knowledge management activties as a strategic tool to help companies prepare for and prosper through mergers and acquisitions. Remember that at any time you may be a target, acquiere, or both.
His book, Beyond the Deal, was just released, yesterday. I look forward to reading it. Congratulations, Hubert!
(Slides should be available on KMWORLD site)