With a tip of the hat to Kenny Rogers 1979 hit, of interest is this article a friend shared with me this week, When to Walk Away from a Deal in the Harvard Business Review (below is a brief summary of the article on BNET.com) by Geoffrey Cullinan, Jean-Marc Le Roux and Rolf-Magnus Weddigen…
“Is your company prone to “deal fever”–getting so excited while pursuing acquisitions that it skimps on due diligence? Caught up in the thrill of the chase, many firms use due diligence to justify the deal rather than to uncover potentially serious problems.”
The article asks the reader to consider…
- What are we really buying?
- What’s the target’s stand-alone value?
- Where are the synergies?
- What’s the most we’re willing to pay?
All good questions. Consultant Bain also offers an article summary, and surveyed 250 senior managers “with M&A responsibilities.” They found that…
- “half said their due diligence process had overlooked major problems,
- half also found that targets had been dressed up to look better for deals,
- two-thirds said their approach routinely overestimated the synergies available from acquisitions, and
- a third acknowledged they hadn’t walked away from deals despite nagging doubts.”
“Top corporate buyers take a similar approach: “When I see an expensive deal, and they say it was a ‘strategic’ deal,” says Craig Tall, vice chair of corporate development at Washington Mutual, “it’s a code for me that somebody paid too much.”
This made me think: when it comes to mergers and the way each company approaches customer service, systems and staff, you have an opportunity to ask…
- Culturally, how different are the approaches to customer support?
- Compared with what the acquiring firm offers currently, are there incremental services that customers get from the target firm?
- How do the costs compare between our in-house support as compared with the target company?
- What additional value does the company’s support staff provide vs. outsourced support? What are the incremental benefits when you consider the areas of overlap, if any?
In the February issue of CIO in 2006, Elana Varon writes in the article “Enterprise Value Awards – A Brief History of IT Value” how Hilton hotels found an opportunity to integrate different systems in operations and customer service (as noted here)…
“… [Hilton integrated] the chain’s property operations systems with its call center, reservations and customer loyalty systems. Hilton’s OnQ suite of applications gives hotel employees access to a complete guest profile at check-in, allowing them to tailor welcome messages and anticipate customers’ needs. Hilton’s internal metrics credit the system with increases in customer loyalty.”
Hilton also offers an online training system through hilton-university.com in multiple languages to its employees for training on OnQ.
At Microsoft, product lines and business units benefit by the centrally managed education systems we offer through Engineering Excellence on subjects that are of importance to employees, such as the Security Development Lifecycle (aka SDL)… and not to be confused with the Microsoft spoof training videos (in two parts here and here). Businesses and employees new to Microsoft get the benefit of this packaged training and guidance.
A lot of companies overlook customer support and services when considering how different companies approach dealing with customer calls and queries. I’ll put these question to a couple of recently integrated business units and see what they have to say.