Park­ing the tanks on the lawn is not the best way to start an ac­qui­si­tion

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE - TANKS ON THE LAWNS TIPS FOR SUC­CESS­FUL AC­QUI­SI­TION THE LAST WORD

You won’t be sur­prised that the main steps taken by com­pa­nies when mak­ing an ac­qui­si­tion in­cludes some navel gaz­ing in the first place, to es­tab­lish the need.

This is fol­lowed by scan­ning the mar­ket to iden­tify ap­pro­pri­ate ac­qui­si­tion op­por­tu­ni­ties. Then, of course, due dili­gence of the tar­get com­pany takes place.

But there is an­other key step that, in my ex­pe­ri­ence, does not get enough at­ten­tion. And that is sur­round­ing what hap­pens af­ter the deal goes through.

Should you ap­proach an ac­qui­si­tion by bring­ing your ‘tanks onto the lawn’ very early on, in other words to take early con­trol? Or do you phase it in?

Ev­ery case is dif­fer­ent. If the ac­quired com­pany is in cri­sis for ex­am­ple, then re­me­dial ac­tion is of course nec­es­sary. But if it’s not, then in my ex­pe­ri­ence, a phased blend­ing in is more ideal.

Bun­nings Group is an in­ter­na­tional house­hold hard­ware chain. The chain has been owned by Wes­farm­ers since 1994 and has stores in Aus­tralia and New Zealand.

Hav­ing re­cently pur­chased the Uk-based Homebase chain, it is now faced with one of the big­gest ac­qui­si­tion fail­ures in re­tail his­tory.

Very soon af­ter buy­ing the com­pany, it ar­rived with ‘tanks on the lawn’. It fired the se­nior man­age­ment team and about 160 mid­dle man­agers.

It also changed the prod­uct mix, which re­sulted in alien­at­ing the core fe­male cus­tomers of Homebase. Ar­riv­ing with tanks on the lawn was a big mis­take. I was rem­i­nisc­ing be­fore Christ­mas with Mark Byrne, the fi­nance di­rec­tor of Tri­an­gle. He was be­hind the pur­chase of Switzers by Brown Thomas back in 1990 and was part of the exec team that in­vited me to help with bring­ing the two busi­nesses to­gether. It was a very suc­cess­ful ac­qui­si­tion and here are some of the steps taken at the time. 1 “The first rule is to wait, ob­serve and learn be­fore rush­ing to make changes. While you may have stud­ied the busi­ness for many months from the out­side, it is only when you take con­trol that you re­ally un­der­stand how it works. Don’t be ar­ro­gant. The ac­quired com­pany may be able to teach you some­thing, as you bring your ex­per­tise to them. Talk to the ex­ist­ing man­age­ment, don’t as­sume that they have noth­ing to con­trib­ute,” said Byrne. 2 Dur­ing the post-ac­qui­si­tion in­ves­ti­ga­tion, de­ter­mine if the new com­pany should be ab­sorbed into the ac­quir­ing com­pany, or if it should con­tinue as an au­tonomous unit with no di­rect in­volve­ment from the new owner. 3 If it’s the for­mer, there will un­doubt­edly be some over­lap and op­por­tu­ni­ties for syn­er­gies. At the very least, that’s likely to in­clude cost sav­ings on shared back-of­fice ser­vices, such as fi­nance, IT and ad­min. “We merged the fi­nance de­part­ment in the first three months, but it was two years be­fore the buy­ing func­tions were merged,” Byrne added. 4 Most im­por­tantly, talk to cus­tomers and talk to the teams of the ac­quired busi­ness. It’s im­por­tant to un­der­stand their con­cerns and al­lay them. You need to en­gage them for con­ti­nu­ity. Mak­ing an ac­qui­si­tion is clearly a big deal and should be ap­proached with great cau­tion. Take time to put a well-con­sid­ered plan to­gether for post-ac­qui­si­tion. There are so many vari­ables that only time will tell the best an­swer. Even if you have a great plan, don’t be sur­prised if you need to change it as you con­tinue to learn. Alan O’neill, au­thor of is manag­ing di­rec­tor of Kara Change Man­age­ment, spe­cial­ists in strat­egy, cul­ture and peo­ple de­vel­op­ment. Go to www.kara.ie if you’d like help with your busi­ness

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