Robert Wood
February 13, 2017

Acquisitions Gone Bad – Don’t Do it!

Screenshot 2017-02-13 21.03.44.png

In my previous discussion, Acquisitions Gone Bad - A Discussion Based on Observation, I explored my experiences in what goes wrong when a company buys another on the wrong foundation.  I used a tongue-in-cheek rule I called “Robert’s Rules of Bad Acquisitions”, or RRBA.  The first and most important of these rules, RRBA 1 is: The acquiring company assumes superiority. And like I mentioned earlier I explored many of the consequences of this rule on the poor outcomes of many deals gone bad.  There is a single topic affected by this rule that dominates all the others combined and that is this: The virtual elimination of the Marketing and Sales teams in the acquired companies proved almost fatal and amounted to the majority of the issues and losses in the deal. 

Before we go further, and to show the reader that I’m not some marketing guy doing some self-aggrandizing bloviating, let me explain my old bias against the people I’m going to defend shortly.  I started my career in applied research and then into consumer product design and development. Naturally in this capacity I worked alongside of the Marketing and Sales team.  In many cases it was my function, R&D, that led the innovation and features of the new product. Once the product was launched, I noticed an amazing thing: whenever a new product was launched, the Marketing and Sales team claimed victory if the product was successful, and held no responsibility if it failed!  If the product was a hit, well that was because of the brilliant marketing program and the aggressive sales team.  If the product flopped, well that was because R&D couldn’t deliver on their vision!  Besides, these Marketing and Sales guys always wore crazy expensive clothes, always seemed to be having fun all the time, and always had lobster and live singers at their off-sites, while I was having corndogs and karaoke at mine.  So now that I’ve established my ‘neutrality’ on the matter, let me explain why eliminating or reducing this team in the post-acquisition process is the worst thing any company can do.

Referring to my earlier discussion, the reason most acquisitions happen is that the acquiring company sees an incremental value in the target company.  Sometimes it is expanding its product portfolio into new markets, sometimes its diversification, others its margin improvement.  Regardless of the reason, the acquiring company values the assets of the target and usually pays too much to get it. Rarely is the reason of the purchase of the target company is to add a few new offerings in the product catalog in the same sales channel to the exact same customers.  Now my experiences fall into the Pharma, Biotech, and Medical Device space, but this discussion is valid for any market. The reasons for most acquisitions are to reach new markets, expand the customer base, and to add diversity to the business.  This is where RRBA 1 comes in.  Somewhere in the courtship in the acquisition process, someone, (actually many), of the executives of the acquiring company sees an opportunity to gain “efficiencies” in the elimination or the severe reduction of the target’s Marketing and Sales function.  “After all, our team are surely better that of the acquired company.  Yes, the products are different, and the sales channel are to a different segment of the market, but our guys can handle that, they’re that good!”  As crazy as that quote sounds, I’ve heard it and seen it many times, and it’s the first click of the time bomb that will eventually blow up in their faces.

In my industry, there is a huge difference in selling an implantable versus selling a capital product, (think heart valves versus a CAT-scan machine), even to the same hospital.  The sales calls frequency are different.  Capital sales are usually short affairs. There is courtship, but once the sale occurs, the salesman is off to court another bride. While selling implantables is a long term relationship.  The sales professional makes many calls over a very long time to gain the trust of the doctor.  The sales point is different:  Implantables focus on the surgeon, the CAT scan on the radiologist. The marketing strategy differs also.  Here the knowledge of the product and the completion comes into play.  The Marketing team has years of experiences specializing in the product class and knows through data and relationships the trends and landmines in the product cycle. The target company was purchased for the future value of its product offering and many times eliminates the very people that that future value was based on: the Marketing and Sales team. Here’s where the vision of the dope cutting off the branch he’s sitting on comes to mind.

So what is a company supposed to do?  Unless the products of the acquiring company are in the exact same channel, customers, and distribution as your current products, do not reduce the target’s Marketing and Sales team for at least a year to 18 months after the dust settles. You’ll likely find that the value of the acquired team is exceeding the expectations, even though it costs more than you think its worth, and you will likely keep most of the old structure and people intact.  Second, if you cannot justify the deal financially with the “efficiencies” of eliminating functions, then do not do the deal.  Walk away from the beautiful bride because there’s a divorce around the corner. And lastly, always check your ego to see if you’re falling into the trap of RRBA 1: The acquiring company assumes superiority.  After all, the goal of any acquisition is to add value, and the value of any firm are the people, not the products, of the company.

Hopefully, you’ve gained some insight on this topic, and to those Marketing and Sales professionals reading this, next time you have one of those blowout meetings with clowns, tigers, and dancers, invite some of those geeks with pocket protectors to the affair, it will make a larger difference than you could know.

View Robert's Profile

The Business Transformation & Operational Excellence Industry Awards

The Largest Leadership-Level Business Transformation & Operational Excellence Event



Proqis Digital Virtual Conference Series

View our schedule of industry leading free to attend virtual conferences. Each a premier gathering of industry thought leaders and experts sharing key solutions to current challenges.

Download the most comprehensive OpEx Resport in the Industry

The Business Transformation & Operational Excellence Industry Awards Video Presentation

Proqis Events Schedule

Proqis Digital

Welcome to BTOES Insights, the content portal for Business Transformation & Operational Excellence opinions, reports & news.
Access all 75 Award Finalist Entires
Subscribe to Business Transformation & Operational Excellence Insights Now
ATTENDEE - Proqis Digital Event Graphics-2
ATTENDEE - Proqis Digital Event Graphics (2)-1
ATTENDEE - Proqis Digital Event Graphics (1)-1

Featured Content

  • Best Achievement of Operational Excellence in Technology & Communications: IBM
  • Best Achievement of Operational Excellence in Oil & Gas, Power & Utilities: Black & Veatch
  • Best Achievement in Cultural Transformation to deliver a high performing Operational Excellence culture: NextEra Energy
Operational Excellence Frameworks and Learning Resources, Customer Experience, Digital Transformation and more introductions
  • Intelligent BPM Systems: Impact & Opportunity
  • Surviving_the_IT_Talent_deficit.png
  • Six Sigma's Best Kept Secret: Motorola & The Malcolm Baldrige Awards
  • The Value-Switch for Digitalization Initiatives: Business Process Management
  • Process of Process Management: Strategy Execution in a Digital World

Popular Tags

Speaker Presentation Operational Excellence Business Transformation Business Improvement Continuous Improvement Process Management Business Excellence process excellence Process Optimization Process Improvement Insights Article Award Finalist Case Study Digital Transformation Leadership Lean Enterprise Excellence Change Management Premium Organizational Excellence Lean Enterprise Lean Six Sigma Execution Excellence Capability Excellence New Technologies Changing & Improving Company Culture Enterprise Architecture Agile end-to-end Business Transformation Execution & Sustaining OpEx Projects Culture Transformation Leadership Understanding & Buy-In Lack of/Need for Resources Adapting to Business Trends Changing Customer Demands Failure to Innovate Integrating CI Methodologies Lack of/Need for Skilled Workers Lack of/Need for Support from Employees Maintaining key Priorities Relationships Between Departments BTOES18 RPA & Intelligent Automation Live BTOES From Home Financial Services Process Mining Customer Experience Excellence Process Automation Technology Cultural Transformation Healthcare iBPM Healthcare and Medical Devices Webinar Culture Customer Experience Innovation BTOES Video Presentations Exclusive BTOES HEALTH Strategy Execution Business Challenges Digital Process Automation Report Industry Digital Workplace Transformation Manufacturing Supply Chain Planning Robotic Process Automation (RPA) BPM Automation IT Infrastructure & Cloud Strategies Artificial Intelligence innovation execution AI Lean Manufacturing Oil & Gas Robotic Process Automation IT value creation Agility Business Speaker Article Systems Engineering RPAs Insurance Process Design Business Process Management Digital Speaker's Interview data management Intelligent Automation digital operations Awards thought leaders BTOES Presentation Slides Transformation Cloud Machine Learning Data Analytics Digital Transformation Workplace Banking and Capital Markets Data Finance Professional Services Education IT Infrastructure IT Infrastructure & Cloud Strategies Live Blockchain Interview Solving Cash Flow with AI BTOES White Paper investment banking Analytics Insight BTOES19 Consumer Products & Retail Enterprise Agile Planning Government Operational Excellence Model Project Management Algorithm Automotive and Transportation Banking Business Environment Digital Bank Enterprise architecture as an enabler Hybrid Work Model Primary Measure of succes Relationship Management Sales business expansion revenue growth Adobe Sign Agile Transformation CoE Delivery solution E-Signatures Electricity Global Technology HealthcareTechnologies Innovation in Healthcare Reduce your RPA TCO Six Sigma Transportation Accounts Receivable (AR) Big Data Technology CORE Cloud Technology Cognitive learning Days Sales Outstanding (DSO) Logistics Services Operational Excellence Example Risk Management business process automation transformation journey Covid-19 Data Entry Digital Experience Digital Network Digital Network Assistant (DNA) Digitization Drinks HR Internet Media NPS Net Promoter Score Program Management Portal (PgMP) Sustainability TechXLive The Document is Dead The New Era of Automation Automated Money Movement Banking & Financial Services Biopharmaceutical Blue Room Effect Building Your Future Workforce in Insurance Business Process Governance Capital Market Creative Passion Digital Transformation Workplace Live Digital Workforce Digitalization ERP Transformation Effective Change Leaders Finance Global Operations (FGO) Financial Services Software Frameworks Hoshin Planning Human Capital Lean Culture Natural Gas Infrastructure Natural Language Processing Organizational Change Pharmaceutical Pharmaceuticals & Life Sciences Project manager Supply Chain Management Sustainable Growth The Fully Automated Contact Center Transformation Initiatives Workplace Analytics eForms eSignatures 3D Thinking BEAM BFARM BTOES17 Big Data Processing Business Analytics Business Growth Centralized Performance Monitoring System Communication Creativity Digital Technologies Digital Technology Educational Psychologist Energy Management Health Insurance Health Maintenance Organizations Hospitality & Construction Human Centered Design Integrated Decision Approach Integrated Decision Making Intelligent Document Processing Kaizen Medicare Moodset for Excellence Natural Language Processing (NLP) Offering Managers Oil and Gas Optical Character Recognition (OCR) Pharmaceuticals and Life Sciences Photographing Price and Routing Tracking (PART) Process Design Document (PDD) Product Identifier Descriptions (PIDs) Python Quote to Cash (Q2C) Resilience SAP Sales Quota Team Work Telecommunications Text Mining Visually Displayed Work Culture master text analytics virtual resource management