Most articles on acquisitions look at the wrong things
 Subscribe to the Three Star Leadership Blog |
| The Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. |
| For weekly tips and resources pointers, check Wally's Three Star Leadership Letter |
| Find out more about having Wally speak to your company or convention. |
| Find out more about Wally's coaching services. |
 |
Microsoft wants Yahoo. Microsoft will pay big bucks to get Yahoo. Yet the odds are against the takeover working. According to David Harding and Sam Rovit of Bain and Company, "More than 70 percent of the big-bang mergers since 1995 failed to create significant shareholder value, according to our research."
Even though that was written in 2004, the numbers still look they hold up. But you'd never know it by reading most of the business press coverage of the takeover try. Nevertheless, you can expect thousands of bits of analysis to appear on pages and screens over the next couple of months.
If you want to predict whether the Microsoft acquisition of Yahoo, or any other acquisition, will be successful, don't pay attention to things like "synergy" and "strategic fit." Instead, pay attention to people issues, like culture, and the likely speed of integration.
Cultural fit is important. It's more important than operational "synergy" or "strategic fit." The part of Yahoo that really matters in terms of generating value is the part that leaves the building when they're done working. What makes Yahoo Yahoo is the people.
And the people at Yahoo have become used to Yahoo's culture. You may think that it's not a very effective culture. That doesn't matter. What does matter is that it's very different from Microsoft's culture.
If the acquisition actually is consummated, most of the valuable people at Yahoo will probably be gone before it happens. Essentially, the people who can make a job change probably will.
Then, after the final papers are signed Microsoft will face the task of integrating what's left into Microsoft. The longer it takes to get from today to the day the integration is complete, the less likely that the acquisition will succeed.
Essentially, the longer and harder Yahoo fights not to be devoured by Microsoft, the less desirable a meal it becomes.
Wally's Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. Click here to check it out.
Request your free copy of "Meeting the Challenges of the Boomer Brain Drain: An integrated approach."
Wally Bock has helped people learn to be great bosses for more than a quarter century. His latest book, Performance Talk: The One-on-One Part of Leadership, makes learning key leadership principles almost effortless by teaching through a story and providing lists of resources for further growth.
Click here to find out more about Wally's coaching services.
For weekly tips and resources pointers, check our Wally Bock's Three Star Leadership Letter.
Click here to find out more about having Wally speak to your company or convention.
Wally, of all the stuff I've seen on this topic the past week or so, this is the only one that wades through the business model natter to the fundamental issue that will make the deal viable or not. It needs to be addressed alongside the business model side of the analysis, and if either side comes up "no" then both should be dropped.
But it seems that planners like to abstract these considerations into wire-diagrams and presume that people will flow around them like electrons, responding accordingly as the power is ramped up or down or the switches are thrown. It's really too bad to see this lesson so ignored, particularly by people who should know better.
Reply to this
Thanks for that comment, Jim. I think the whole thing works this way. The strategists come up with an idea (Wow! Let's buy Yahoo!). They don't worry about the messy people parts because that's for day-to-day management to handle. So there's no due diligence on cultural fit.
Then, what Jack Welch has called "deal heat" takes over. That's target fixation for mergers and acquisitions. Everybody becomes a defender of the process and making a deal becomes the goal at any cost. "Ah, heck, they figure. "We can take of the culture thing when the deal is done."
Reply to this