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The Acquisition Integration Approaches
model of Philippe Haspeslagh
and David Jemison provides insight and guidance in Mergers and Acquisitions
(M&A) on choosing the optimal integration approach.
In mergers and acquisitions, the motto was
traditionally often "Make them like us", or relatively simple criteria where used to
choose an approach (such as the size and and quality of the
acquired firm).
Haspeslagh and Jemison (1990) have
stated that the approach a company should take towards integration should
be understood by considering two (additional) criteria:
1. The need for strategic
interdependence
2. The need for organizational
autonomy
Strategic Interdependence
Obviously, the goal and central task in
any acquisition is to create the value that is enabled when
the two organizations are combined. There are four types of value
creation:
I. Resource
sharing (value is created by combining the companies at the operating
level)
II. Functional skills
transfer (value is created by moving people or sharing information,
knowledge and know-how)
III. General
management skill transfer (value
is created through improved insight, coordination or control)
IV. Combination benefits
(value is created by leveraging cash resources, borrowing capacity, added
purchasing power or greater market power)
Organizational Autonomy
Haspeslagh and Jemison warn that
managers must not lose sight of the fact that the strategic task of an
acquisition is to create value (I-IV), and must not grant autonomy too
quickly, although obviously people are important and should be treated
fairly and with dignity. The need for organizational autonomy can be
answered using three questions:
A. Is autonomy essential to preserve
the strategic capability we bought?
B. If so, how much autonomy
should be allowed?
C. In which areas specifically
is autonomy important?
The Preferred M&A
model
Depending on the score on these
two factors (see graph), the preferred acquisition integration approaches are:
- Absorption (management needs
courage to ensure that its vision for the acquisition is carried out)
- Preservation (management focus
is to keep the source of the acquired benefits intact, "nurturing")
- Symbiosis (management must
ensure simultaneous boundary preservation and boundary permeability,
gradual process)
- Holding (non intention of
integrating and value is created only by financial transfers, risk-sharing
or general management capability)
Compare with this M&A approach: Core
Competence |
Leveraged buy-out |
Parenting Styles
| Porter |
Parenting Advantage
|
Management buy-out |
BCG Matrix
|
Greiner
|
Kay
|
Mintzberg |
Outsourcing
More management models
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