As of late, we haven’t seen too much news about failed mergers, have we or was it buried under seemingly more interesting industries’ development news ..? Like, the latter-day’s Seven Sisters on the ‘Net driving all M&A activity by grazing the startup pastures bare?
Actually, there are a couple of interdependent developments, it seems:
- Classic mergers and take-overs (and divestments) seem to become more rare, as the importance of classical industry (primary-to-tertiary, maybe -quarternary) has diminished, in favour of, let’s say, quintary pure-information based industry/industries. I.e., beyond mere ‘service sector’ services but data-oriented everything. Hence, it’s IPOs to behemoths taking over microcompanies not mergers of (relatively) equals.
- Classic mergers failed so pervasively in resulting net positive ROIs that no-one wants to deal with hem anymore. Including a development like this.
- [Not all lessons learned, apparently; otherwise, these would be shared quickly and the M&A business would rebound — see (among) the following: ]
- The new take-overs are of the obliterate-or-fleece kind; the heap of gold just being too big to resist after which the target is plucked bare for the few nuggets of worth in there, if any, then made disappear as technology integration overrides anything qua ideas that was of any value.
- This pointing to where previous industries’ M&As failed, every time again [at least, often also for other factors of incidental and less interesting character]: Not accounting for IT. Would love to see the research that proves that the upswing of IT in business life negatively highly-correlates with merger failures.
- Because the focus has been so much, longer-term, on ‘synergy’ — that always was in support fucntions that had to be shrunk, one plus one makes one plus less than half, or so. But this never worked, as the ‘keep as of old until integrated’ was executed so lacklusterly, Always leaving too many traces of old even when clean-slate renewal was attempted multiple times.
- This in turn, because IT grew so much in prominence in business execution and administration — but wasn’t recognised as such; always relegated to the lowest of basement departments, that in the end the ‘integration’ [hardly ever to any measure of success off zero, almost always not associatiable with the term ‘success’ rather] of separate IT systems costs tons and resulted in … more costs, permanently, for not only the near term but -ever.
- And, as above, this lesson haven’t been learned. As shown in this: Brexit woes…
From which the questions arise:
- Why haven’t we all (in particular, auditors of all shades that should have been the ones to have learned and warned) learned and warned that IT integration was so crucial, both in due diligence / cost estimations and in failure rates?
- What is the content of the learned [not]; how to get good IT integration cost estimates, and what are successful methodologies for IT quality assessments ex ante and ex post?
- Do we only learn from history that we don’t learn from history? This because two bullets don’t look right but three do.