"Strategic growth acquisitions require a clear vision as well as a plan to deliver incremental value — and the flexibility to listen and adjust to the market as necessary."Erika Schraner, Americas Technology Operational Transaction Services Leader, Ernst & Young LLP
Integration has never been more challenging than it is today, as powerful megatrends such as cloud computing, smart mobility and social networking are launching a time of hyper-innovation.
Organic growth isn't always fast enough for large technology companies to maintain their competitive edge, so they are using current capital for strategic acquisitions that position them for future growth. In 2Q 2011 such deals ranged from picking up key talent by buying a two-person company to 10 multibillion-dollar deals.
One eye on strategy, the other on operational execution
Extraordinary discipline and a dual focus — with one eye on strategy and the other on operational execution — are required for the resulting transaction integration journey to deliver true incremental growth in shareholder value. The chart at right identifies deal-making integration issues arising from our analysis of 2Q 2011 technology M&A transactions.
Capitalizing on synergies
From an operational perspective, companies must be prepared to address the impact on both organizations efficiently, capitalizing on synergies quickly. For example, immediate cost containment or opportunistic cost cutting and operational improvements must be recognized and implemented rapidly.
Success requires clear objectives and flexibility
From a strategy perspective, companies must have clear objectives, deep understanding of both businesses and cultures and inherent flexibility — capable of addressing issues as they arise and making mid-course adjustments as necessary. For example, success in a strategic purchase requires the buyer to identify quickly key talent and intellectual property assets and take immediate and aggressive steps to protect and retain them.
Growth transactions are not for the feint-of-heart. They are high-risk, high-reward propositions and require a clear vision, strong engaged leadership and clear and frequent communication of the vision, expectations and rewards.