Acquisitions: Some thoughts on how to do it right

Over the past couple of weeks I have talked a bit about how badly the AFC acquisition and the Vivace acquisition went for Tellabs. Part of the problem with this is that knowing what went wrong does not provide some advice on how to do it right. I have acquired or been acquired about half a dozen times. I thought I owe you what I see of what could be done to do it properly. Now even if you do things right, you may fail. That is true in all things.

I have seen plenty of acquisitions where there was no real plan of where the combined company was going to go in any detail. There was a notion of how the acquired company would bring value to the equation, but no real execution strategy. What normally gets done is a "Synergy" Plan. These plans are all about how to merge the G&A functions. They are standard and almost nobody can argue with them. That makes these plans easy. Necessary but easy.

The real question is what should the combined company do outside of G&A. Let me start with Sales and Marketing. More than once I have seen lots of "Synergy" in these functions. Most of the time that has killed Sales momentum on the acquired company. The existing Sales Teams don't know the new products nor do they always call on the buyers of the new products. If you are going to eliminated the acquired Sales Team, you need to plan to reassign the quota mid-year. I think that needs to be thought about in all organizations. Essentially as the combined company is losing people there needs to be a plan to reallocate the work. If the work is not reassigned, then it just won't get done.

The other piece of this equation is to look at the people and see if they are likely to fit into the new culture. This will be a range of definitely yes, definitely no, and a whole lot of maybes. But you can not have no conversations about it. People will not have a lot of trust in any acquisition. This is true of both the acquirer and the acquired. The best thing you can do is lay out the plan. As I have written about Leadership in the past, you need to tell people what you want to accomplish. If you can make that plan attractive, they will help execute it. Even then there will be people that just don't want to be part of the new company. Its natural and when it happens or you see it happening you can not fight it. What you want to do is help it work for you and the employee. As you treat employees that stay and leave well then you will begin to build trust.

Looking at the Vivace acquisition, it was not clear that there was a plan to execute either within the Santa Clara organization or within the rest of Tellabs. One simple example would be MPLS development. The 8800 was the first MPLS product inside of Tellabs and had some significant installations. Both Finland and Chicago then went and developed MPLS separately. If I go back to the Marconi acquisition at AFC, I was beginning to formulate a plan on how to merge technology where it made sense (example - POTS cards). The Tellabs acquisition then stopped that effort, but that was the idea - slowly merge the technology base.

So, if you want to get a handle of what I am saying...Have a Plan, Tell people about the Plan, Execute the Plan, Monitor the Execution. This Plan has to extend to all areas of the acquisition. This is true even for parts of the target that will remain separate.

Jim Sackman
FocalPoint Business Coaching
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