Fast tech acquisitions can pay off, but with due diligence [ZDNet] Hult Blog

Securing first-mover advantage via rapid acquisitions is a high-risk move which needs a meticulous roadmap and discipline. It helps to have first-mover advantage in technology, as vendors race to gain an edge by acquiring highly sought-after entities before competitors get the chance, sometimes by forking out massive bids. But then it must also be understood these are also riskier type of ventures because new ground is being covered, said Michael Yoshikami, CEO and founder of U.S. investment consultancy Destination Wealth Management. Historically speaking, outcomes from such acquisitions have been a mixed bag. For every major success story such as  Googles acquisition of Android  in 2005 that now equipped the Web search titan with a leading mobile platform, there are equally big flops as indicated by the many write-downs from other tech giants, Yoshikami stated. First-mover advantage is not always an offensive tact but also a defensive move against rivals, noted Mike Grandinetti, global discipline lead and professor of innovation, entrepreneurship and management at Hult International Business School, pointing to  Facebooks USS$1 billion acquisition of Instagram. The The track record of major tech companies doing quick mergers and acquisitions (MA) is nothing short of abysmal, Grandinetti said.jury is out as to whether that deal will pay off for the social networking juggernaut, he said. Most mergers are ill-conceived and the lack of appreciation for post-merger integration has been vastly underestimated. There is no greater cause of destruction of shareholder value, and the examples are endless, he pointed out. The professor said these included  Cisco killing off its Flip camcorder business,  Microsofts US$6.2 billion write-down of its aQuantive  ad agency acquisition, and the ongoing  HP-Autonomy battle over alleged fraudulent accounting. image credit: gloople.co.uk Grandinetti explained the problem in the HP-Autonomy debacle had nothing to do with alleged accounting fraud, but rather the lack of a disciplined acquisition process. Former HP CEO  Leo Apotheker, who spearheaded the merger, made unrealistic public comments about unique synergies when there were none, and HP was dramatically overpaying for the asset, something  HPs own CFO  Cathie Lesjak had raised but was not heard. Tamper quick buys with discipline Still, observers disagreed that quick acquisitions were inherently bad moves, as long as companies do their due diligence and mitigate potential risks. Luke Pais, partner, transaction advisory services at Ernst Young Solutions, said there are actually substantial benefits to quick acquisitions to boost business acceleration, considering todays fast-paced dynamic tech marketplace and shifting consumer and corporate behaviors. As for the risks, a host of problems will spring up if acquirers do not give sufficient due diligence, he said. When that happens, the negatives or warning signs are missed, such as overestimation of the acquired companys capabilities, overpayment due to incorrect estimation, and poor talent integration. And all this chips away at the value of the completed acquisition, he cautioned. For tech acquisitions, the value drivers generally center on the technology, people and customer base. Be it the assimilation of the acquired companys staff, technology services, or the cross-selling of combined business capabilities to customers, all post-merger issues should be ironed out and sorted with the roadmap, before completion of the acquisition, Pais emphasized. Grandinetti argued that coming up with roadmap in itself is not the end, because companies need to be disciplined and committed to sticking to it once an acquisition target is in sight. There is a huge difference between acquiring out of panic because an asset is suddenly in play versus keeping to the strategic roadmap on where company wants to go and then moving quickly when it is clear that the desired target are open to discussions to be acquired. The best tech acquirers all have a very well-defined integration process that anticipates all of possible obstacles or alarm bells, and begins addressing them right at the start. If these appear insurmountable, disciplined companies will simply not move forward†¦and they will never over-pay, said the Hult professor. The talent and cultural fit is also critical to a successful merger to exploit the first-mover advantage, Grandinetti noted.  Googles US$1.65 billion acquisition of YouTube  in 2006 is a good example of achieving first-mover advantage in the online video space. Its founders retained their leadership roles while Google continued to invest in YouTube by taking a very long-term perspective, and that patience has paid off, he stated. Only six years after acquisition is Google seriously acting to monetize their You Tube investment. Many other companies would have demanded rapid profitability on their large investment, which would have destroyed YouTubes market adoption strategy, Grandinetti pointed out. Charles King, principal analyst at Pund-IT, noted one of the biggest mistakes in tech companies make in mergers is assuming successful deals are all about technology. That the target company is a good cultural fit is equally important, otherwise their talent will head for the exit. Technology assets are obviously important, especially if you want to impact the market quickly but the employees are the people who will help ensure the innovation and success of future efforts. A deal that doesn’t take that point seriously into account is virtually doomed from the beginning, he said. Republished from ZDNet, original article can be found here. Photo credit: Rowan Casey [gravityform id=1 title=false description=false tabindex=0] Make the most of what your career has to offer with a Masters in International Business from Hult. To learn more, take a look at our blog Role of the global MBA in the technology sector, or give your employability a huge boost with an MBA in international business. Download a brochure or get in touch today to find out how Hult can help you to explore everything about the business world, the future, and yourself. Hult Rotation offers you a chance to study in a truly global way. Our rotation program allows you to study and be immersed in some of the finest cities in the world. 📠¸: @jasminmanzano . Hult Rotation offers you a chance to study in a truly global way. Our rotation program allows you to study and be immersed in some of the finest cities in the world. 📠¸: @jasminmanzano . Each year, Hult seeks to enroll a talented and ambitious incoming class from all over the world. We look for diverse students with a wide range of experiences, perspectives, and interests—students who will thrive in our unique educational atmosphere. Are you ready for a truly global experience? 📠¸: @iambrunadiniz . Each year, Hult seeks to enroll a talented and ambitious incoming class from all over the world. We look for diverse students with a wide range of experiences, perspectives, and interests—students who will thrive in our unique educational atmosphere. Are you ready for a truly global experience? 📠¸: @iambrunadiniz . We’re excited to start 2020 on a ranking high! Hult is proud to have been placed #28 in Poets Quants 2020 rankings for Best Undergraduate Business Schools in the US. Taking a huge leap of 32 places from our 2019 position, we’re also very happy to have secured top positions in key categories like: life-changing experience, practicality of the degree, and global immersion. . With five global campuses, a student body of over 130 nationalities, and a learn-by-doing approach—Hult offers a student experience like no other. . We’re excited to start 2020 on a ranking high! Hult is proud to have been placed #28 in Poets Quants 2020 rankings for Best Undergraduate Business Schools in the US. Taking a huge leap of 32 places from our 2019 position, we’re also very happy to have secured top positions in key categories like: life-changing experience, practicality of the degree, and global immersion. . With five global campuses, a student body of over 130 nationalities, and a learn-by-doing approach—Hult offers a student experience like no other. . â€Å"I’m from an engineering background and needed a whole new skill set for the industry I wanted to switch to. I learned a lot about myself and how I deal with being out of my comfort zone. I learned both soft and hard skills, from how to work in very diverse teams to key accounting metrics and strategy. I was surprised by how weak I was at certain tasks in English or how strong I actually was in other areas. Hult gave me opportunities to try new things and meet people from places I never thought I would have friends. . My internship experiences gave me the chance to broaden my view of different cultures and different companies. I had the opportunity to work and live with people whose values differed from people in my home country. I thought that this would be difficult, but it gave me the chance to reflect on my own values and assess if they were a result of my home country environment or if they were intrinsically mine. . Diederick ter Kulve (@diederick.terkulve) Netherlands Masters in International Business . â€Å"I’m from an engineering background and needed a whole new skill set for the industry I wanted to switch to. I learned a lot about myself and how I deal with being out of my comfort zone. I learned both soft and hard skills, from how to work in very diverse teams to key accounting metrics and strategy. I was surprised by how weak I was at certain tasks in English or how strong I actually was in other areas. Hult gave me opportunities to try new things and meet people from places I never thought I would have friends. . My internship experiences gave me the chance to broaden my view of different cultures and different companies. I had the opportunity to work and live with people whose values differed from people in my home country. I thought that this would be difficult, but it gave me the chance to reflect on my own values and assess if they were a result of my home country environment or if they were intrinsically mine. . Diederick ter Kulve (@diederick.terkulve) Netherlands Masters in International Business . Say a big hello to our Bachelor of Business Administration program cover star, Elisa Orus Plana âÅ" ¨ . â€Å"I’m excited for the future—especially that I cant predict whats going to happen. Maybe Ill end up in Mexico working for a trading company or maybe in Africa, developing my own business. Everything is possible, and the options are constantly changing. I love the idea that Im never going to be stuck doing the same job until the end of my life if I dont want it to be like this. . Hult really supports me and my ambitions and truly believes that we deserve to be considered as professionals as well as students. Here, I get to express not just my opinions but all elements of myself. From my creative side with the Fashion Society to my finance and business sides in Trading Club and the Management Consulting Club. We get a different type of learning here. Not just essential knowledge and theory, but practical skills and mindset. The school is always evolving. We’re encouraged to innovate and to always look for new ways of doing traditional things. We learn how to be more confident and become aware of how we can impact our environment. The school aims to help you become a better version of yourself and to stand out from the crowd.â€Å" . Elisa Orus Plana French Bachelor of Business Administration Class of 2021 Say a big hello to our Bachelor of Business Administration program cover star, Elisa Orus Plana âÅ" ¨ . â€Å"I’m excited for the future—especially that I cant predict whats going to happen. Maybe Ill end up in Mexico working for a trading company or maybe in Africa, developing my own business. Everything is possible, and the options are constantly changing. I love the idea that Im never going to be stuck doing the same job until the end of my life if I dont want it to be like this. . Hult really supports me and my ambitions and truly believes that we deserve to be considered as professionals as well as students. Here, I get to express not just my opinions but all elements of myself. From my creative side with the Fashion Society to my finance and business sides in Trading Club and the Management Consulting Club. We get a different type of learning here. Not just essential knowledge and theory, but practical skills and mindset. The school is always evolving. We’re encouraged to innovate and to always look for new ways of doing traditional things. We learn how to be more confident and become aware of how we can impact our environment. The school aims to help you become a better version of yourself and to stand out from the crowd.â€Å" . Elisa Orus Plana French Bachelor of Business Administration Class of 2021"> During the final days of 2019, you probably reflected on what you’ve accomplished this year—and even this decade—and what you’d like to achieve in 2020. Let us know in the comments below. During the final days of 2019, you probably reflected on what you’ve accomplished this year—and even this decade—and what you’d like to achieve in 2020. Let us know in the comments below. â€Å"The first time we did group work on the program, I went head-to-head with a colleague. It taught me a lot about how I see people, how people see me, and how conflict can be resolved in a kind and productive way. The best feedback you get, when delivered constructively, is the most critical because it really feeds into how you lead. I’ve completely reversed my leadership style—the result is so much richer and more powerful when you lead from behind and lead with strength. . Studying in tandem with working, whilst challenging, gave me the perfect platform to directly apply learning concepts into my business environment, the competitive landscape, and the real-estate industry as a whole. When I started the program, I was very happy in my corporate role. But my courage and aspirations grew to the point that I took on a whole new direction. Having my career coach, Joanna, as a sounding board allowed me to really be strategic and get to know myself. She coached me thro ugh all the interviews, the research, and the questions. It went in parallel with what I was doing academically and after six months everything just clicked. . I went into the EMBA knowing I had nothing to lose and I’ve come out with everything. Great strength, global friends, amazing learning, mentors from professors, a job I love, and the knowledge that I can set my mind to achieve anything and with the right support and resources I’ll get there.† . Kashani Wijetunga British, New Zealand Sri Lankan Associate Director Senior Strategy Consultant CBRE EMBA Class of 2019 . â€Å"The first time we did group work on the program, I went head-to-head with a colleague. It taught me a lot about how I see people, how people see me, and how conflict can be resolved in a kind and productive way. The best feedback you get, when delivered constructively, is the most critical because it really feeds into how you lead. I’ve completely reversed my leadership style—the result is so much richer and more powerful when you lead from behind and lead with strength. . Studying in tandem with working, whilst challenging, gave me the perfect platform to directly apply learning concepts into my business environment, the competitive landscape, and the real-estate industry as a whole. When I started the program, I was very happy in my corporate role. But my courage and aspirations grew to the point that I took on a whole new direction. Having my career coach, Joanna, as a sounding board allowed me to really be strategic and get to know myself. She coached me thro ugh all the interviews, the research, and the questions. It went in parallel with what I was doing academically and after six months everything just clicked. . I went into the EMBA knowing I had nothing to lose and I’ve come out with everything. Great strength, global friends, amazing learning, mentors from professors, a job I love, and the knowledge that I can set my mind to achieve anything and with the right support and resources I’ll get there.† . Kashani Wijetunga British, New Zealand Sri Lankan Associate Director Senior Strategy Consultant CBRE EMBA Class of 2019 . â€Å"It was now or never. I knew that I’d have likely stayed in my neighborhood for years to come if I didn’t take this opportunity. I’d not lived or studied outside of the U.S. before. So I left my job as a global strategist at an advertising agency and moved halfway around the world. I’ve come back a more culturally aware, well-versed person. I’ve realized that everything is a learning experience and an opportunity for growth. Ill definitely carry this mindset with me into the future. Technology and social media allow us to be different people in several places at once. Im excited to see how I can establish myself in whatever city Ill be lucky enough to call home and still maintain deep connections with people all over the world. I’m inspired by my classmates every day. Hearing some of their life stories and how getting this degree fits into their greater mission has been very humbling. My biggest challenge has been finding the ‘right’ path for me. There have been rooms Ive felt like I shouldnt be in, but now Im proud to feel as though I truly belong, wherever I am.† . Dwayne Logan, Jnr. American MBA Class of 2019 . â€Å"It was now or never. I knew that I’d have likely stayed in my neighborhood for years to come if I didn’t take this opportunity. I’d not lived or studied outside of the U.S. before. So I left my job as a global strategist at an advertising agency and moved halfway around the world. I’ve come back a more culturally aware, well-versed person. I’ve realized that everything is a learning experience and an opportunity for growth. Ill definitely carry this mindset with me into the future. Technology and social media allow us to be different people in several places at once. Im excited to see how I can establish myself in whatever city Ill be lucky enough to call home and still maintain deep connections with people all over the world. I’m inspired by my classmates every day. Hearing some of their life stories and how getting this degree fits into their greater mission has been very humbling. My biggest challenge has been finding the ‘right’ path for me. There have been rooms Ive felt like I shouldnt be in, but now Im proud to feel as though I truly belong, wherever I am.† . Dwayne Logan, Jnr. American MBA Class of 2019 . Happy New Year, Hultians! . Happy New Year, Hultians! .