MIT Sloan Management Review

Leadership and Organizational Studies, Operations Management and Research

 

Integrate Where It Matters

By Till Vestring, Ted Rouse and Sam Rovit

October 15, 2004

Many merging companies make the mistake of integrating too much, too soon. In certain cases, a more selective approach is the best way to realize the deal’s anticipated value.

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Many studies have shown that the most treacherous time in the failure-strewn business of mergers comes after two companies tie the knot, when they attempt to combine operations. Surprisingly, however, they often destroy value not as a result of inattention to detail but through excessive zeal in their integration efforts.

That’s because acquirers, recognizing the many potential dangers that lurk in the merger process, often attempt to immunize themselves by painstakingly mapping out comprehensive, detailed plans for blending every aspect of operations. What they don’t realize is that in following their careful, well-intentioned efforts, they could be digging their deals into the grave. The reality is that too much integration can block companies from realizing the benefits of a merger just as easily as too little can. And, in some cases, overintegrating can do far more damage.

Consider Novell Inc.’s $855 million acquisition of WordPerfect Corp. in the 1990s. The marriage between the leader in the corporate networking market and one of the historic front-runners in word-processing applications was intended to create a formidable competitor to Microsoft Corp. Once the deal was signed, Novell launched a broad and extensive integration program.“The devil is in the details,” one Novell senior vice president told Softletter, a trade publication of the software industry. As Softletter reported, “success [for Novell] depends on thousands of nitpicking decisions that can tie up... To read the complete article, login or sign-up using the form below.

 
 

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