Why All The Bad News? (Why 80% of Acquisitions Don’t Add Value)

Acquirers often fail to take advantage of effective systems & people of purchased entities.

inferno2The most damaging and easy to avoid pain that companies inflict on themselves is the loss of perfectly fine and happy people through poor communication, or thoughtlessness.

True stories;

Polishing division of metal finishing company forced employees to move an hour south of the current location and simultaneously receive a ten cent cut in their hourly pay.  To achieve a tiny little savings this firm incurred a very big cost (in cash and customers) to replacing and retraining that many hard to fill positions in the chaos of integration.

Key man who ran the large manufacturing operation for 8 months of the year while the owner played in other states was not told of the selling of the company or offered any recompense or  recognition for his many years of excellent service and deep knowledge of customer base & operation.

When he did find out through other sources, he effectively killed the deal when he took a job with the primary competitor in town.

My most cherished painful memory of tortured employees was the destruction of the entire electric motors inventory by the sorely abused employees of the acquired entity.  Over 20M of perfectly fine finished products had wires cut as the inventory was crated and sent to its new home by the very disgruntled employees that felt they had been cheated out of their earned vacation pay (in effect the acquirer paid to have useless steel expensively crated, shipped, and scrapped).

In all of these cases, big money would have been saved, customers would have received their shipments on time and in working order, and in the second case, the owner would have retired, sold his company for a fair price, (it never did sell afterwards) if hard working, decent people had been treated fairly.

Add your comments or send me your stories.  This is an interesting business.

Looking to grow through acquisition? Packard Acquisitions Snapshot or contact Mike@packardgroup.com 952-542-9318

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