Research Notes on Acquisitions

Keys to Front End Success (DiGeorgio, Jnl of Change Mngt. 2002)
• Selection of the Right Target
– Strategic Alignment
– Potential Synergy
– Privileged Assets (inc ‘Soft’ assets)
– Cash Flow/Revenue/Returns – NEI

Keys to Middle Stage Success
• Understanding & Agreement
– Legal Issues
– Confidentiality Issues
– Timing Issues
– ‘Due Diligence’ Diligence
– Comprehensive Valuation Method

Due Diligence on the ‘Soft’ Issues (Atkinson & Clarke, Management Services, 2007)
• Valuation of Intangibles & IP
• Opportunities in Systems Development
• Underdeveloped Market Opportunities
• Synergistic Potentials
• Human/Knowledge Asset Value
• Effects of the ‘Soft Issues on Post Acquisition Integration

Keys to Integration Success
• Planning (12 Month + 100 Day + Review Process)
– Desired Future State
– Selecting Champions of the Process
– Resistance to Change
– Communications Plan
– Cultural Issues
– Systems Integration
– Customer Retention
– Key Staff Retention
– Speed of Integration Process

The Dangers of Positive Bias Lovallo, Viguerie, Uhlaner & Horn (HBR 2007)
• ‘Confirmation Bias’ & Blindness
• Overconfidence
• Underestimation of Cultural Differences
• Cursory Planning
• Winning at Any Cost
• Tunnel Vision
• Sunk Cost Fallacy

Eight Red Flags
• CEO Ego Drives the Project
• Focus on Revenue Benefits Rather than Cost Savings
• Lack of ‘Soft Issue’ Due Diligence
• Inexperienced Acquisition Team
• Shifting Price Limits
• Numerous Bidders
• Sunk Cost Escalation
• Absolute Determination to Close the Deal