SoftBank’s acquisition of Finnish mobile games maker Supercell in 2013 for $1.5bn did not grab the headlines to the extent its $21.6bn acquisition of Sprint did, but Nikkei Business in its December series on cross border M&A points to it as evidence of the final characteristic necessary for successful acquisitions – “animal spirits” – a hunger for growth with the acquisition showing the direction in which Masayoshi Son wants to take the company.
The Nikkei Business magazine goes on to conclude the series with “Five Conditions for Success” in cross border M&As:
1. Do not go near M&As without a concrete and detailed management strategy for what will happen after the merger
2. Set up a specialist team within the company, which investigates target companies and draws up shortlists
3. Be very strict on the contents of the agreement. It will be vital when unforeseen problems occur after the acquisition.
4. For cross border acquisitions, the key is to motivate the management team in the acquired company. However a proper agreement must be put in place regarding switching to other companies and performance based compensation.
5. Make preparations in advance for all kinds of scenarios. Although it’s hard to predict events like the Lehman shock, preparations will help with coping with change.
I would add a few to that. For example, whilst it might be best to take some time before making radical changes to the acquired company, symbolic changes such as taking the parent company name relatively early on help focus the two companies on “what is different now” and “what we have in common” and stop both companies from sliding back into their pre merger habits, with the acquired company feeling neglected and directionless.
Try to bring the acquired company executives into the HQ fold as soon as possible. Even though it’s best to delegate to them the authority they are used to, it’s also important for them to understand how to socialise their proposals through nemawashi with their peers in the headquarters. Actually moving to Japan seems to have been a step too far for many non-Japanese executives, but frequent business trips should be encouraged and supported. Perhaps even a mentor could be appointed.
Finally, as the Nikkei Business itself points out, it’s actually the Japan HQ that needs to change if their acquisitons are to succeed.
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