CFO WAR STORIES: Failed M&A Integration
Third party horror story highlighting a failed integration of a company. The acquirer was based out of Los Angeles and the acquiree was, of course, an east coast company based out of Boston. Pretty big rivalry from an NBA standpoint but there were considerable differences in how offices conduct business on both coasts. Apparently, the Los Angeles office made a poor first impression on the Boston company and friction developed. The relationship deteriorated enough that the LA company sent an expresso machine to the Boston company to establish a friendlier relationship with them. This gesture, I believe, was genuine as the LA office really enjoyed the expresso machine. You can imagine what happened. That expresso machine represented, to the Boston company, everything that was wrong with the LA Company and stood as a constant reminder of their differences. It is interesting that what was intended to bridge a gap between two companies and bring them closer together effectively forged a valley between them. I cannot begin to quantify the opportunity costs of an acquired company not being on the same page as the acquiree. Even non-strategic acquisitions need to understand the overall objectives of the parent company in order to fit into it and add value.
It may seem like common sense but here are my thoughts regarding this sad story; You only get one chance to make the first impression and a relationship will be jaded from that point on. Differences (cultural, demographic, geographic, etc.) all need to be considered in establishing a strong relationship with other companies – not just acquired ones. A relationship starting off on a bad foot will take time to turn-around.
One needs to consider what exactly cause friction, in order to evaluate alternatives and arrive at a solution to remedy. The best way to discover information about culture and how an organization thinks is by communication, listening and eventually forging trust. In my mind, the best communicators over-communicate and still find times that they didn’t communicate enough. Companies acquire other companies for a variety of reasons but they don’t acquire them to not grow.