What would happen when yahoo gets bought by Microsoft? Many claim that the two companies have different cultures, and that there might be integration issues. I read an interesting article tonight: ”Making the deal real: How GE capital integrates acquisitions” I decided to post the summary on my blog, as a test of interest.

The acquisition process is generally fairly simple.
1. An assessment of the compliances with regulations
1. Sent out a letter of intent
2. financial negotiations
3. signing announcement
4. closing of the deal.

Ronald N. Ashkenas, Lawrence J. DeMonaco, and Suzanne C. Francis underline that integration of the two companies can be complex. “Sometimes the acquisition succeeds, but mainly because the acquired company is not integrated in the acquirers organization.” The authors compare an acquisition with an arranged marriage. The parents negotiate the deal, sign the contracts and expect the couple to live happily ever after.

Four general tips on how to approach acquisitions:
1 Acquisition is a process

An acquisition is not a project with a timeline; integration can be slow and costly. The integration can include costly communication tactics. Investigate the management culture of the target company. Facilitate the issue management of cultural differences.

2. Acquisition requires a social team player to facilitate the acquired company

“The acquiring team is lead by a general manager and consists of people in various areas including tax, finance, business development, human resources and technology.” One would guess that the leader would be responsible for integrating the acquired company, while this might not be the case. The authority position often limits the ability to become a facilitator. People in the acquired company need to be able to ask stupid questions, this is why there should be a person responsible for the social aspects.

3. Have a crisp management plan ready, to avoid scaring the employees

The employees of the aquired company might ask themselves, who are these new owners and what are their intentions? The uncertainty of creeping changes should be taken away, but in a way that everyoneÂ’s dignity is maintained. There is no such thing as a merger of equals, so the way that the acquired company will do business will change.
Basically, “every employee has to know if they still have their job.” “The answer is to have decisions about management structure, key roles, reporting relationships and other career affecting aspects ready before the announcement to acquire is made.”

4 Require an action plan with a time limit from the acquired company

“In acquisitions, many people; sometimes thousands need to learn to work together.” An idea is to initiate a 100 day plan for integrating. Create situations that allow the employees to socialize, exchange information and feelings. There should be a clear formularization of the acquiring companies methods and values so that the acquired company is able to create an action plan. This method will make the transition, and can be used to reflect upon.

Ronald N. Ashkenas, Lawrence J. DeMonaco, and Suzanne C. Francis, 1998, Harvard Business review’, pp. 168-178