How acquisitions can revitalize companies

Citation

(2006), "How acquisitions can revitalize companies", Strategic Direction, Vol. 22 No. 1. https://doi.org/10.1108/sd.2006.05622aaf.002

How acquisitions can revitalize companies

How acquisitions can revitalize companies

Vermeulen FMIT Sloan Management Review, (USA), Summer 2005 Vol 46 No 4, Start page: 45, No of pages: 7

Purpose – To consider the revitalizing effect of acquisitions on successful companies. Design/methodology/approach – Notes that many such companies become complacent and unduly set in their ways. Suggests that the process of making acquisitions can provide a useful challenge to inertia. Refers to this as “hybrid vigor”, explaining that the challenge of integrating organizations that do things differently can trigger awareness of different approaches and the development of completely new processes and systems. Gives examples of the value of cross-fertilization and proposes a set of principles that companies can use to achieve revitalization through acquisition. Findings – Suggests that once managers are aware of these acquisition benefits, they may actively seek out targets that they can learn from. Advises companies to link the size of the acquisition to the extent of their corporate need, noting that big acquisitions tend to be highly disruptive, whereas regular small acquisitions can help a company to maintain its vitality. Highlights the need to ensure different viewpoints are brought together, identifying best practices and follow-up activities to ensure that they are implemented, rather than either leaving the acquired company alone or completely assimilating it. Recommends viewing integration problems as part of a wider review of old methods and routines. Discusses the balance between organic growth and growth through acquisition, suggesting that the two should be balanced over time. Practical implications – Includes a questionnaire to help managers determine the revitalization potential of an acquisition target. Originality/value – Shows how acquisitions can help successful companies remain open in their thinking.Classification(s): Top Management – Growth; Premier Management;Management Styles; StrategyStyle: General reviewISSN: 1532-9194

Keywords: Organizational behaviour, Creative thinking, Management effectiveness, Integration, Mergers and acquisitions