Abstract
In this article, we argue that post-acquisition performance can be improved by adding an outside-in business-level strategy to synergy-driven corporate-level strategy. Multinational companies (MNCs) frequently opt to accelerate new business development through the acquisition of innovative companies. We present an in-depth case study of an integration failure after a multi-million-dollar acquisition and also explore how the integration was eventually turned into a success. Initially, the synergies between the MNC legacy business and the acquired company do not play out as expected. As new business development stalls and important growth markets are missed, corporate value destruction occurs. As often happens, consultants are hired to fix the problem, but cannot turn the tide. Eventually, the MNC empowers key people inside the company and finds a way to solve the problem. The essence of the solution lies in deep, genuine, outside-in strategizing at the business level. In hindsight, the MNC suffered from corporate strategy myopia relying on high-level analyses and net-present value (NPV) calculations of potential synergies as a starting point for post-acquisition integration, instead of a clear, outside-in view of the strategic business model required to create value.
Highlights
Even though this was lower than the long-term projected growth target, this case study clearly demonstrates that pursuing an outside-in strategy as part of the post-acquisition integration process provides a solid foundation for a sustainable growth
Reflecting on what has been learnt, one can argue that a robust outside-in strategy should be developed as a basis for identifying the synergy value that can be created at the corporate level during the preparatory stages of an intended acquisition, just like the usual due diligence and net-present value (NPV) calculations
This robust outside-in strategy leads to a high level of integration performance, which may in turn open newly undiscovered markets or provide new knowledge for future acquisitions
Summary
This article shares the outcomes of in-depth case-based research of a postacquisition integration failure at a large multinational company (MNC) that acquired a multi-billion dollar highly innovative company (IC). We shed light on what we believe is a common cause of failure: lack of clarity on how the acquisition will create value from a customer perspective. The concept of value creation is defined as the net benefits realized (technical, economic, service, and social) in exchange for the monetary price paid (Anderson & Narus, 1998). It is narrower than the holistic concept of creating value as, proposed by Mahajan (2016)
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