Human beings take risks. In business, one of the riskiest moves company stakeholders can take is to acquire and merge with another company or to divest part of what they have. Despite the best initial intentions between the merging companies, many mergers, acquisitions, and divestitures produce results far below expectations. For some companies, the experience can be more than maddening – it can be deadly, ending with the demise of the business.
SAP White Paper SAP for Industrial Machinery & Components
Madness?
Mergers, Acquisitions,
and Divestitures CONTENT
^ 4 Executive Summary
^ 5 In the Name of Growth 5 Risky Business 5 A Common Path to Success
^ 7 Premerger Assessment Phase 7 The Role of IT 7 Gain the Insight You Need
^ 9 Postmerger Integration Phase 9 The Pitfalls of Postmerger Integration 10 Bridging the Gaps
^11 Solutions for Mergers, Acquisitions, and Divestitures 11 Solutions for the Premerger Assessment Phase 11 Strategy Management 11 Business Planning and Consolidation 12 Solutions for the Postmerger Integration Phase 12 Identity Management 12 Resource and Portfolio Management 13 Master-Data Management 14 Solutions for Building a Business Process Platform 14 Building on an Integrated IT Environment
^15 The Hallmarks of Successful Mergers and Acquisitions 15 Where to Go to Beat the OddsExecutive Summary
Avoiding Failure in Mergers,
Acquisitions, and Divestitures
Human beings take risks. In business, Why do so many MAD attempts fail? one of the riskiest moves company This paper discusses why failure hap-stakeholders can take is to acquire and pens and how to prevent it by following Despite continued merge with another company or to the overriding best practice in successful record setting in global divest part of what they have. Despite acquisitions, mergers, and divestitures: the best initial intentions between the preparedness. Knowing how to prepare, deals, at least half are merging companies, many mergers, what to prepare, and when to prepare. doomed to failure.acquisitions, and divestitures produce results far below expectations. For At what point in going MAD does failure some companies, the experience can most often occur? The paper identifies be more than maddening - it can be the phase in the merger and acquisition deadly, ending with the demise of the process where the breakdown occurs. business. And it describes what is required to prevent that failure.Will your merger, acquisition, or divesti-ture (appropriately enough, the acronym Finally, what do you need to assure both is MAD) succeed or fail? If you answer sanity and success? This paper presents that question with historical eyes that the steps to swiftly and precisely exe-look back at major mergers for almost cute a migration path using a specific set 20 years, you might as well toss the of solutions for successful mergers, coin. Your MAD journey has a 50-50 acquisitions, and the divestitures that chance of failing. Such a high failure rate often result. These solutions support should raise a red flag to any company a flexible IT environment, the important getting ready to go MAD. premerger assessment phase, and the critical postmerger integration support However, despite these odds, mergers - without which the whole MAD deal continue to increase unabated world- can go bad.wide, and the failure rate is keeping pace. Companies will continue to make the same mistakes - unless they can get advice from white papers like this one.
4 SAP White Paper - Madness? Mergers, Acquisitions, and DivestituresIn the Name of Growth
Beating the Odds
It is the age of the megadeal. Fueled by ongoing consolidations, pressures from globalization, and a rise in interest from Success depends on your company's ability to meet private equity, the number of mergers the challenges of postmerger integration. and acquisitions is growing at a frenetic pace around the globe - and has been for years. Between 2002 and 2005, for and services, reporting results for a In an SAP study completed in December example, merger values in the United newly combined entity, and setting up 2006, 175 leading companies spoke States rose from US$462 billion to processes to encompass new divisions about the business initiatives they under-over $1.5 trillion - a 35.6% compound are no small tasks. Success depends took to ensure operational excellence or 1annual growth rate. on your company's ability to meet the improve business agility - and how IT 3challenges of postmerger integration. supported these initiatives. For compa-Risky Business These challenges are especially critical nies pursuing mergers and acquisitions, for IM&C manufacturers, as combining IT organizations played a significant role Whether they are pursuing market lead- complex supply cha... [download for more]
