Blog: MS-LinkedIn, Flipkart-Myntra, Myntra-Jabong – An Acquisition spree!

#MergersAndAcquisitions

MS-LinkedIn, Flipkart-Myntra, Myntra-Jabong – An Acquisition spree!

Acquisitions today are not about consolidation but about 'combining the forces!
MS-LinkedIn, Flipkart-Myntra, Myntra-Jabong – An Acquisition spree!

From Myntra to Jabong – wardrobe is getting better and so is Flipkart’s place in the space of e-commerce – this is in view of the recent acquisition of Jabong by Flipkart-owned Myntra. Acquisitions today are not about consolidation but about 'combining the forces’!

But this article is not about the whats and whys of the acquisition or what this acquisition will result in. This piece is about why even after acquisitions, companies still prefer to be separate independent entities. Has the meaning of the term ‘acquisition’ changed in this new world of business?

Why even after acquisition, do companies act as independent entities? Is it about growth, agility, innovation, leadership, long-term vision or culture or values?

The acquirer today just lays down the rules and the companies remain separate structurally, senior executives remain intact with same authority and autonomy. So what are the motives behind acquisitions - Growth & expansion, scaling, consolidating markets, addressing disruptions – the reasons are actually all these. 

But acquisitions today are more like aligning powers. They are about managing organizational drivers in a safe mode – optimally decreasing operational consequences of the actual acquisition, reducing culture clashes, dealing with bigger disruptors, sharing knowledge and best practices. For any two companies, whether the acquirer or the acquired, acquisition integrations is a crucial thing which if not carried out carefully, can lead to instability at many levels. According to Charles Lee, a professor at the Stanford Graduate School of Business, "it's in both sides' interest to not tamper with something that's working."

It is truly about integrating perspectives and for the product. Keeping the companies acting the way they are not touching them structurally seems to be the new thing that business big wigs are doing. But what is this strategy about -  

Cost

Mostly in mergers and acquisitions, the process usually takes a toll on the operational dynamics of both organizations. The time spent in integration of various complex processes and relationships takes significant time of not only the people who are involved in administration, but also the top management. The spill over of integration usually results in low employee productivity and motivation levels, which in turn affects the bottomline. So letting companies work the way they have been seems to be the most appropriate strategy.

Knowledge sharing

In most acquisitions, the acquired organization receives knowledge from the acquirer. However, today it is about knowledge sharing. We take the best practices of both the companies and choose what needs to be used. As aptly stated by Jeff Weiner in his letter to LinkedIn employees, “When Satya first proposed the idea of acquiring LinkedIn, he said it was absolutely essential that we had alignment on two things: Purpose and structure. On the former, it didn’t take long before the two of us realized we had virtually identical mission statements. For LinkedIn, it was to connect the world’s professionals to make them more productive and successful, and for Microsoft it was to empower every individual and organization in the world to achieve more. Essentially, we’re both trying to do the same thing but coming at it from two different places: For LinkedIn, it’s the professional network, and for Microsoft, the professional cloud. Both of us recognized that combining these assets would be unique and had the potential to unlock some enormous opportunities.”

Leadership

It’s no more about replacing the leadership. Top management change cannot and does not guarantee that the vision of both the companies will be aligned. Today, organizations believe in keeping the face of the (acquired) company intact because of its history and its association & relationships with consumers. 

Autonomy

For many acquired companies, the lack of autonomy related to day to day operational affairs can be suicide. The new strategy is to provide autonomy and independence to the acquired companies for their operations so that there is no dearth of motivation. Confidence results in higher motivation levels.

Vision & values

It is about collaboration. A single shared vision is what it takes for the companies to move ahead. Companies today adopt a more collaborative approach when it comes to aligning the vision and values of the company.

 

2 http://www.cnet.com/news/silicon-valleys-big-acquisition-mantra-buy-it-leave-it-alone/

 

Topics: #MergersAndAcquisitions, Watercooler

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