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period before we closed the acquisition,” Hunter remembers, “we had a pretty good feeling about the key people. Almost all of the people we wanted to keep are still with us.” As these people move around the organization over time, it’s more difficult to quantify the benefit of the original acquisition, but there’s no doubt as to their value to the acquiring company. Another example is the acquisition of Semitron Industries in Swindon in the UK a few years ago. The product made there proved too expensive to continue to produce in the UK, so the decision was subsequently made to transfer production to China. A failed acquisition, you might think. “But we got some people with our Swindon operation, some critical talent, who have transferred and played crucial roles in our worldwide silicon strategy, including the company in Texas,” said Hunter. “So this team of guys that we got from the acquisition are a huge success, even if the product line hasn’t driven a lot of profit for us. You could look back at that acquisition and say that for what we intended, for that product line to get really profitable and grow the revenues, it hasn’t really worked out, but the talent we got and how they’re leveraged across the rest of the business is phenomenal.” Assets are another benefit that can be difficult to identify in the short term bottom line. One Littelfuse acquisition that did not go according to plan was that of a company in Korea, which Littlefuse purchased to strengthen its presence in Asia. The acquisition itself was challenging, says Hunter, and did not achieve its purpose of establishing market position in Korea, but the acquired company’s plant in the Philippines time. How long should we give them, before we pass judgement? “A lot of it is the definition of what failed means,” offers Mark Hall, chief information officer of CXO Media and founding general manager of the CIO Executive Council. “If you’re a large company making an acquisition you’re doing it for a business reason. Often, the companies don’t fully recognize the value of an acquisition because they’re off and on to the next one before they’ve realized the full vision of why they acquired the company. Part of the reason for a perception of failure is because it may take three to five years to fully actualize the merger of an organization. It often falls to the CIO to fully integrate the organization in such a way that the company can fully recognize the value of the acquisition.” Companies in mature industries who want faster growth than they can sustain organically are on the lookout for acquisitions to accelerate expansion. In sectors where technology moves quickly, it makes sense to acquire specialist technology from elsewhere, rather than develop it yourself. That was the case when Chicago-based circuit protection manufacturer Littelfuse acquired Teccor, of Dallas, Texas, in 2003. A mid-sized company cannot develop everything itself, explained Littelfuse chairman, president and chief executive Gordon Hunter. Teccor’s silicon materials were a long way from Littelfuse’s core competence in metallurgy, so the purpose of the acquisition was primarily to obtain the technology. What Littelfuse also gained, however, was a group of people knowledgeable about the technology and its applications. “Even in the due diligence Strategic management May 07 Businessexcellence 17 “Part of the reason for a perception of failure is because it may take three to five years to fully actualize the merger of an organization” ‘Birds do it, bees do it, even educated fleas do it’; let’s do it, let’s merge and acquire. With apologies to Cole Porter, merger and acquisition are in season, and seem almost as common as falling in love. The global business environment dictates that companies have to grow to consolidate their footprint in the market place. If they cannot do this organically, they have to look to acquisition to broaden their perspective, through new products and technologies, new markets, reduced costs through economies of scale, or simply eliminating competition. While executives may dream about a merger made in heaven, however, analysts report that up to 75 percent of acquisitions fail, which is a worse failure rate than marriage; but, as with love, the statistics seem not to put anybody off. If you will indulge me one more quotation, the British 19th century politician Benjamin Disraeli said there are three kinds of lies; “lies, damned lies, and statistics.” So do the statistics lie? If the majority of mergers and acquisitions are alleged to fail, there must be more than statistics behind the drive to keep on doing it. It may well be that analysts who judge the success of an acquisition look no further than to compare the revenues of the merged company with the cost of its union. That may produce an understandable black and white league table, but it could also be a rather simplistic equation. Is there more to the success of a merger than numbers? And what time scale are they looking at? Huge amounts of money are spent on integrating disparate IT systems after a merger, and where multinationals are concerned, the process can take a long

Businessexcellence May 07 18