Technology acquisitions — such as Facebook’s acquisition of WhatsApp, IBM’s acquisition of Redhat, or Broadcom’s acquisition of VMWare — are increasingly common and are particularly powerful for propelling growth. They account for approximately 20% of all acquisitions, help firms control nascent markets, pursue strategic renewal, gain access to new knowledge, and advance technological capabilities.
After a Merger, These 3 Inefficiencies Can Actually Be Assets
The counterintuitive case for preserving some redundancy.
March 05, 2024
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Summary.
Strategic inefficiencies play a surprising role in the success of technology acquisitions. Research involving hundreds of organizations and interviews with executives reveals that certain inefficiencies in post-merger integration (PMI) can actually propel growth. Key inefficiencies identified include: mirror teams where staff from both companies work together, increasing complexity but enhancing integration; double incentives, offering additional rewards post-merger to align goals at the cost of higher expenses; and co-location, prioritizing costly in-person meetings for better communication and relationship building. The study concludes that these short-term inefficiencies can lead to more effective long-term corporate growth, challenging the traditional focus on efficiency and redundancy reduction in corporate mergers and acquisitions.