When a merger is like a marriage
On this blog, we recently discussed how acquisitions can sometimes resemble the relationship between step-parents and step-children. Psychologists and economists have explored metaphors for the logistical, emotional and financial realities for companies in a merger. A more popular comparison writers make is between mergers and matrimony, as two companies make a permanent commitment to move forward together. Like a successful marriage, a successful merger makes a whole that is greater than the sum of its parts, and involves compromise on both sides to iron out details and communicate effectively.
Whether those compromises happen in negotiations (like determining how to re-title the former CEO of the smaller company) or integration (deciding how to combine research and development labs) there is a marital give and take between businesses to ensure future successes.
In tech publications, the marriage analogy manifests itself in buzzphrases: "the perfect marriage of x and y," or "a match made in heaven." Because the commitment companies make in a merger is so serious, it's an apt set of observations. To extend that metaphor, here are five examples of M&A situations that can resemble partnerships between people.
- The Brady Bunch. When two companies merge, they bring baggage from all their previous endeavors. Fitting it all under one roof can be a challenge, and lead to some trial and error in the integration phase. Some departments or subdivisions (like Jan) may feel like they've gotten shortchanged attention or appreciation as the company restructures its priorities. Ultimately, the goal of such an integration is to allow all entities to coexist harmoniously under the same corporate banner.
- The Odd Couple. We've discussed boutique acquisitions on this blog before, and tech companies are becoming sought-after properties for unlikely buyers. From yogurt companies to clothing brands, more commercial giants are looking to boost their tech bona fides with splashy tech acquisitions. It might not be immediately clear what brought two companies together, but as long as the primary company has a strong vision for moving forward, these can be quite successful. It could be that a food label needs your know-how to build public-facing applications, or to enhance data exchange with partners. We suggest that companies keep an open mind to unusual pairings.
- The May-December Romance. Critics were a bit divided when Yahoo purchased Tumblr for $1.1 billion in 2013. On one hand, the move was a bold statement on the part of recently-installed CEO Marissa Mayer, who took the reins at Yahoo to help improve its public image. As a Google veteran, her decision to acquire the young, hugely popular sharing platform looked to many like a savvy decision. For a company with a reputation as an email platform for Baby Boomers, Tumblr was a trophy acquisition that also boosted traffic and lent relevance to a brand that many saw as past its prime.
- Honeymooning. A mainstay of tech mergers is the ecstatic press release announcing what an extraordinary, ingenious, lucrative deal two companies just inked that will transform the industry and demolish their competitors. Enthusiasm is well-placed, but remember that integration is often a long and complicated process that can't be effected perfectly. Initial stock price bumps often stabilize, the news cycle moves on and parties establish a new normal of business-as-usual.
- Divorce. Mergers aren't always successful, and that's why it's essential to implement faultless acquisition strategy with the help of M&A advisors. Sealing the deal is when the real work begins to ensure the long-term success of a corporate marriage.