Studies consistently demonstrate that acquirers who spend more than 5% of their market value on acquisitions each year have higher success rates. Occasional acquirers don’t spend enough time on acquisitions to be experts at the process. One of the biggest barriers is that they fail to understand the distinction between running a business and acquiring one. Merging two businesses is a categorically different undertaking from running one big company.

Experienced acquirers create strategic integration plans to deal with the challenges of integration. Let’s consider why running a company is so different from purchasing one.

Running a Company is a Prolonged Effort 
Acquiring a company is a one-time event. Sure, it might require time and lots of planning. Ultimately, though, you’re moving toward a singular goal. Project management is not the same as business management.

Running a company requires the ongoing optimization of a wide range of circumstances so that they can remain in positive equilibrium for the long-term. That includes skills, timing, product qualities, timing, locations, customer diversity, and so much more. Merging two businesses is about planning for change.

Change is inherently chaotic. It requires acceptance of uncertainty and the loss of control. It means charting new territory, managing surprises, and coping with turbulence. Ideally, a well-run business minimizes turbulence and chaos.

Decision-Making Strategies
Daily business operations tend to be hierarchical, and is ideally based on making optimal decisions based on available analytics. Mergers offer little time for this. You make decisions based on imperfect, incomplete information, and hope for the best. You make tweaks when things don’t work out, and celebrate when they do. This decision-making process is deliberately structured to circumvent typical hierarchies.

Merging two companies uses entirely different metrics from those used to run a company. Monitoring integration requires you to monitor how well change is unfolding, and to track results in a way that measures progress as compared to your strategic intent and key value drivers.

Culture Management 
In daily operations, the cultural milieu of a company is like the water in which a goldfish swims. It’s everywhere and nowhere, visible only to outsiders. When you manage an acquisition, however, cultural integration becomes a complicated and demanding tasks. It’s unpredictable, hard to measure, and requires a lot of self-awareness. The tweaks you need to make may not be readily apparent—or possible. Ultimately, this is the thing that will make or break the merger. Failures of cultural fit can bring everything else crashing to the ground. Poor fit means losing customers, team members, and profits. It’s also something that’s incredibly common among novice acquirers.

An acquisition isn’t just business as usual, and is far more than just a different or more complicated take on regular business. Though mergers offer terrific opportunities for growth, they use a different set of rules. The skills you use to run your business may be useless. You need a plan for both the merger and the integration that follows, and the people involved in either side may need different skills and vastly different approaches. Ignore this fact at your peril.

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