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How do you retain key talent amid merger mayhem? This article summarizes the talent retention strategy created and executed during Borland Software's acquisition of Segue Software in 2006. This strategy is applicable for any company that desires to grow through the acquisition and integration of intellectual capital, regardless of sector.

This article discusses the issues for a company, and its counsel, to consider when inheriting different policies and procedures for information technology after a merger or acquisition. This article also includes a practical guide to integrating such policies and procedures and timing suggestions for completing the necessary steps. The article will also address special topics such as privacy policies, open source issues, and export compliance. [Hat Tip to themanager.org]

Thorough and comprehensive Intellectual Property (IP) due diligence requires much more than compiling a listing of the company's IP assets. Rather, IP due diligence requires assessing the strength of the company's IP rights in the marketplace, the strength of the competitors' rights in the marketplace, and the effect of the IP on the base company's products and other IP rights. [Hat Tip to themanager.org]

In an interview with BNET, M&A expert James Freund describes 10 critical negotiating tactics.

Owners of private companies normally sell their shares at a 20-30 per cent discount during mergers and acquisitions. The 'private firm discount' is one reason the stock market reacts more favorably when companies announce a private acquisition than when the target is a publicly-listed firm.

From the buyer's point of view, says INSEAD Associate Professor of Strategy Laurence Capron, the discount reflects a presumed higher risk associated with the value of private assets due to a lack of information about the target firms, their lack of liquidity and their lack of visibility. From the seller's point of view, the discount can reflect naivety, a lack of financial advice and the choice of a preferred buyer rather than the highest bidder.

Merging companies have a choice. They can waste the time between the merger announcement and the deal's close by sitting around waiting for regulatory approvals and the official change of control. Or they can use their time wisely to identify synergies and plan operational integration - giving the merger a JumpStart by predefining the new company's post-merger identity.

Most M&A experts and merger integration managers would agree that a successful outcome from any single merger or acquisition is far from certain. Studies repeatedly confirm that half of all business "marriages" fail. Yet when M&As work, they create significant value - as demonstrated by the 50 percent of corporate unions that succeed. The secret to their odds-beating success? Strong leadership combined with professional execution and the pursuit of growth, right from the start.

A decade after our first study on merger integration, A.T. Kearney has revisited the topic and discovered new insights into what makes for a successful merger integration. Among our conclusions: Some of the most commonly accepted wisdom surrounding M&A strategy needs to be revised.

M&A is complicated. Cross border M&A is even more difficult, and it now accounts for almost half the world’s total deal value. Managing cultural differences, integrating across borders and creating the right organizational structure are just some of the challenges Accenture has identified.

Although mergers and acquisitions are an attractive option for growing profit and expanding a business, the risks involved may cause some companies to avoid realizing their full potential. An acquisition factory is an excellent complement to organic growth and a large-scale mergers and acquisitions approach, as the focus is on acquiring smaller, more manageable companies in a similar or related field. It also involves a more systematic and efficient approach in researching potential targets, managing a series of transactions and mitigating integration risks.

Sixty to 70 percent of U.S. acquisitions—even more in Europe and Asia—are private, yet there has been little research on M&A activity involving private firms. Most appraisers agree that a minority interest in a privately held company typically sells for less than a minority interest in a similar publicly traded company (a difference known as the discount for lack of marketability or “illiquidity discount”), and ample evidence exists to support the illiquidity discount for minority transactions. At the same time, appraisers disagree on whether such a discount should be applied to controlling interests of private companies.

Limited research on the subject has not yet suitably explained why private companies would sell under these disadvantageous terms.

With respect to the imprecision in defining M&A best practices, we want to highlight the extent to which maxims about effective deal management can be misconstrued or twisted in ways that miss important points. Truisms espoused by academics and advisors, or shared among executives, can be less complete than they seem on the surface. When the margin for error is narrow, that can lead to trouble. The following examples are drawn from the M&A literature and from our experience both in conducting and researching M&A integration.

How to decide if a deal makes sense? We've put together an assessment questionnaire to help you think through the various dimensions of an M&A decision. The questionnaire is no magic bullet, nor is it a substitute for the hard thinking that must go into a formal due-diligence process. But in just a few minutes, it could provide an early indication of whether you're on the right track - or heading for an M&A disaster.

Picking up the pace of M&A requires big changes in a company’s processes and organization—even if the deals are smaller.

Accenture High Performance Business research has found that high-performance businesses can use an economic downturn to improve their competitive position. Building a merger and acquisition (M&A) capability—with platforms and processes that span every stage of the deal life cycle—can ensure that a company can take advantage of M&A opportunities as they arise, thus positioning itself to achieve high performance when conditions improve.

M&A is a powerful instrument that can be used to gain access to complementary technology, channels and other critical assets without the risks or travails of organic growth. The downside is that acquisitions often result in product complexity. Successfully managing the complexity of a newly combined product portfolio can capture value, smooth the overall merger process-and deliver the full promise of M&A.

Acquirers often squander value in mergers by treating integration of business functions as a mechanical, cost-saving exercise – overlooking valuable revenue synergies and value generating activities. By thinking more laterally and approaching PMI as an opportunity to rethink how functions can enhance value, acquirers can secure superior long-term growth. This Focus Report, second in our series on PMI, describes how this approach can be applied to five core functions: information technology; research and development; procurement; production networks; and sales and marketing.

The biggest challenge in creating value from cross-border mergers and acquisitions (M&A) in rapidly developing economies (RDEs) is not extracting synergies, but understanding the full spectrum of risks before the deal is closed. Based on a survey of executives with extensive experience in M&A in RDEs, this focus highlights the four main drivers of these risks and how to minimize and manage them.

As the economic screws tighten, acquirers are under mounting pressure to realize synergies from their targets as quickly as possible. BCG’s series of Focus Reports on postmerger integration (PMI) has already covered many of the keys to success but there are several special issues that demand careful strategic consideration. The third Focus Report in our series on PMI addresses four of these issues including carve-outs, unionization, cross-border mergers and acquisitions in rapidly developing economies (RDEs), and customer-focused deals.

In today’s economy, it is easy for managers to lose focus during the risky merger integration process. In fact, the chances are that one in two integrations will fail. Based on research, Accenture has identified seven catalysts that can help managers integrate an acquisition successfully, positioning their companies for financial stability now and high performance when the upturn comes.

This white paper explores what it means to build an integrated culture and effective leadership team that supports your merger or acquisition's strategic priorities.

Companies can seize the opportunity in mergers by involving employees and customers in the integration process, retaining critical staff, generating momentum by quickly winning key accounts, and serving the right customers in the right way.

This collection of articles explores many of the common people-related integration challenges organizations are likely to face during an M&A transaction, and offers recommendations to help executive leadership get it right for Day One and beyond. There are five sections:

Section 1: Due Diligence
Section 2: Integration Management
Section 3: Integration
Section 4: Post-Merger Integration
Section 5: Divestiture

The numbers don’t lie. Many top corporate managers are faced with the challenge of a post merger integration (PMI) at least once in their career. And empirical studies indicate that one of every two PMI efforts fares poorly.1 These statistics are particularly telling given that mergers and acquisitions have been a staple management instrument for almost a century now and that there has been growing professionalism in corporate M&A efforts over the last decade: practically every transaction is accompanied by due diligence, with the increased involvement of external specialists such as lawyers, auditors, tax consultants and investment bankers. Yet challenges with post merger integration are consistently high and the resultant threat to a company’s performance perhaps higher than it needs to be.

There are no hard and fast rules to ensure that a given merger will result in corporate wedded bliss. But we have found that quantitative analysis — something PMI managers have largely overlooked — can evoke both surprising questions and even more revelatory answers. Certain post merger integration scenarios, which we describe below, can create very difficult starting points for the companies and the managers involved. If a company faces one of the less favorable scenarios, it becomes doubly important to assess the likely causes of difficulty and to address these proactively and thoroughly.

In an empirical examination of one of the world’s largest PMI databases by the authors and the University of Muenster in Germany, a set of risk factors have emerged that are statistically significant — as opposed to just hearsay — in influencing PMI success, as defined by criteria described below. These factors also can be used to help determine the types of “risk profiles” that pertain to a merger, each profile having a unique statistical likelihood even before any integration measures have been implemented. Identifying the risk profiles before closing a deal is thus crucial.

Extrapolating from our quantitative analysis, certain PMI myths emerged that can influence both the effectiveness of the PMI process and the comparative difficulty in realizing the value of the merger – proposed or imminent. Using statistical analysis in an effort to minimize risks and discard outdated notions can help an organization stack their odds in favor of a more successful post merger integration.

Cross-border mergers and acquisitions (M&A) are on the increase in virtually every sector across the globe. Although such transactions offer significant advantages, they also pose several postmerger integration (PMI) challenges, ranging from difficulties in obtaining reliable, accurate information about a target to cultural, political, and regulatory hurdles. This Focus discusses five major challenges and suggests various solutions, drawing on the experiences of companies that have successfully executed cross-border M&A.

Companies advance myriad strategies for creating value with acquisitions—but only a handful are likely to do so.

In my experience with global mergers, creating stable working environments and certainty about the immediate future is critical to re-establishing commitment. Looking at the increasing M&A activity in the private and public sectors, and thinking about the possibilities for the future, leads me to conclude that at no time in the history of management has the role of the line manager been so critical to successful performance.

Why successful M&A now depends on getting your ducks in a row as early as possible.

As companies gear up for growth, they are seeking targets that can help their companies innovate.

Culture is a broad, woolly concept, which often means different things to different people. And, unsurprisingly, culture clashes have been used to describe all sorts of organizational conflicts that occur following an acquisition. Therefore we launched a study to understand which specific types of cultural compatibility impact the subsequent performance of a cross-border acquisition. Six dimensions of cultural difference were identified and investigated. The six dimensions were concerned with differences between the management styles of the bidder and target in terms of: organisational formality, extent of participation in decision-making, attitude towards risk, systemisation of decision-making, managerial self-reliance and attitudes towards funding and gearing. The key dimension that had a measurable effect on acquisition performance was risk orientation.

A lot of academic research shows that the odds of making an acquisition work are not high. Careful thinking about what it means for an acquisition to succeed, coupled with an analysis of why deals fail, can lead to some practical advice for managers, thus helping them to develop a more refined view. More specifically, in order for acquisitions to pay off, they ought to pass four tests.