Another interesting article from the folks at CFO magazine, this one from R. Neil Williams, CFO of Intuit, maker of QuickBooks, Quicken, TurboTax and other financial management tools. Intuit (Nasdaq: INTU) has done 15 acquisitions over the last two years. In his short article, Williams looks at the question, “Is there a magic potion to a successful inorganic growth strategy?”
Short answer: no … but there are keys to the process. Interestingly, having answered “no” to his own question, Williams turns immediately to the importance of strategic logic. Let the Merger Verger state that another way: he gives first priority to strategic logic, admonishing readers to be aware of (and leery towards) shiny objects that invariably come before acquisition leaders.
Pivotal Quote (wherein Williams comments on his overarching observation about deals as a means to corporate growth):
The lesson was that the most successful mergers involved [targets] that had similar culture, style and operating process. The ones that only brought economic benefit were challenged to succeed.
The Short and Sweet from the Verger:
- The best deals arise from a buyer’s strategic plan and they address an identified gap or shortcoming.
- A thorough due diligence process must include an assessment of the culture, the values and the operating mechanisms of the target company.
- When acquiring a company still managed by its founders/owners, make sure you and they see a common future for “their baby” under your leadership and get them really juiced about that enlarged potential.
- Empower your integration team to move quickly, including making rapid decisions.
- Determine as soon as possible the fundamental changes that you expect to make and then communicate clearly what will stay the same and what will change.
The full text of the CFO article is available by clicking here. One page, well worth reading.
If you’d like to see some of the deals that Intuit has completed over the last few years, there is good descriptive information on their website. Click here.
Magic potions are not a strong suit here at the Merger Verger but we can offer the following list of ingredients (sourced from an old friend).
Eye of newt, and toe of frog,
Wool of bat, and tongue of dog,
Adder’s fork, and blind-worm’s sting,
Lizard’s leg, and howlet’s wing.
You’re on your own for quantities and procedure. Just be careful.