So Your Acquisition Failed

• Changes in the competitive environment – Failure to recognize that the competitive environment will change and continue to evolve, changing the value of the acquisition.
• Failure to Create Value for the Customer – An acquisition should result in customers being better served.
• Employee Disengagement – Studies report a 23% increase in “employee disengagement” after an acquisition event, and this may last up to 3 years. Disengaged employees get in the way of acquisition success.
• Poor Leadership – This can result in poor communication or a post-acquisition power struggle that negates the effectiveness of any expected synergies.
• Culture – Radical differences in company culture can be hard to bridge quickly, or ever. Sometimes technology teams at target companies purchased for their technology perceive the confidence displayed by arriving new management as cockiness, stupidity, or lack of appreciation for the subtleties of the technology developed.
• Lack of Communication – Lack of communication with each team, and lack of communication between the acquirer’s team and the target’s team limit chances for success.
• Poor Integration Process/Strategy – Lack of careful planning, clarity, and appreciation for details regarding key employees, initiatives, teams, processes, products, marketing, and customer service can destroy acquisition value as the post-acquisition process unfolds.
• Misevaluation – This can be due to inadequate due diligence, perhaps because:
  o the team assigned wasn’t strong enough for the task, because perhapso not enough time was allowed to gather and analyze the facts, oro the vital low-level management team members who know the details and run the company were not engaged in the evaluation process
• Technology – Incompatible technology, often due to lack of ERP integration (the integration between ERP, CMR, or billing systems), can diminish the greatest of potential acquisitions. Failure in ERP integration was first noticed as a powerful fatal problem as far back as 1968, when the newly created Penn Central Railroad, a merger of the Pennsylvania Railroad and the New York Central Railroad, lasted only 367 days.The book “The Wreck of the Penn Central” describes the ERP integration failure arising from differing technologies led to a loss of customers and millions of dollars in billings each quarter, described this way:

“… when the merger finally began, the Penn Central discovered to its horror that it’s “modernized electronically automated equipment” didn’t work worth a damn. Because the different computer systems of the Pennsylvania and Central were not made compatible in advance of February 1, 1968 (merger date), they started off not talking to each other, electronically speaking. Data gathered along the old New York Central couldn’t be transmitted directly to the PRR’s… brain center in Philadelphia.”