Anthony Hilton: Takeovers struggle after sidelining existing experts
Saturday 22 March 2014
It is almost axiomatic that when big companies buy dynamic small companies they screw them up.
It is one of the reasons why so many acquisitions fail, but at a dinner organised by Foresight, a leading investment management group, I met someone who had been through the mill and could explain at first hand what went wrong. The problem, he said, did not come from the people at the top; rather, it came from service departments such as IT and human resources, which – as he put it – would come in from the flanks. They would arrive clutching the company manual and insisting that the new acquisition scrap all its existing processes and procedures and conform instead to the “worldwide” standard and processes used by the rest of the group.
In small, successful firms, HR and IT are usually close to the front line in supporting the business-getters. Replacing these functions with something generic and nonspecific to their needs has an immediate and dramatic effect on the ability of the front-line staff – in sales or production – to do their job as well as they did before.
So the acquired management has a choice. It either wastes time and effort trying to keep the group bureaucracy at bay, in which case it is less focused on growing its business. Alternatively, it lets the bureaucrats come in and impose their processes, in which case performance suffers and morale collapses. Either way the bad drives out the good, and the dynamic business adjusts down to the level of comfortable mediocrity enjoyed by the group as a whole.
- 1 Scientists create transparent mouse complete with see-through organs
- 2 Pope Francis issues top 10 tips for happiness
- 3 Disney heiress Abigail disowns her share of family profits in West Bank company
- 4 Israel's propaganda machine is finally starting to misfire
- 5 Amazonian Indian tribe filmed making contact with Brazil village in rare video footage
Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
- < Previous
- Next >
iJobs Money & Business
£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...
£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...
£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...