Although specialization is an inherent part of choice making in many organizational settings, the resulting isolation of specialists in acquisitions results in an absence of integration of their analyses. As a result, top managers often focus their attention on more simply and shortly communicated problems with strategic match somewhat than the more subtle and qualitative issues of organizational fit. Only a number of of these individuals had labored collectively earlier than, and the entire course of lasted solely six days. This instance, while excessive, highlights the issues generated when giant groups of specialists with a slender focus are thrown collectively to investigate a deal under intense time pressures. Under such conditions, individuals who have not labored closely collectively earlier than or who don’t share a typical expertise and jargon can communicate only the most standardized info shortly and effectively.
Feeling that they’ve put their popularity for sound, decisive judgment on the line by initiating the process, senior executives might hurry to complete the deal, in part to justify their earlier decision to pursue the goal. First, strategic fit points instantly mirror the espoused objective of the acquisition. Second, these issues often lend themselves to standardized analytical approaches that investment banks and consulting firms use to evaluate markets, products, industries, or technologies. Third, few channels of communication to exchange information exist among the many numerous groups of analysts who carry out their work in numerous time durations. Within a given specialty, folks have a tendency to assemble similar information and produce comparable analyses. As bigger teams of individuals with completely different specialties become involved, determination makers have more problem comparing and integrating analyses.
Other executives might take steps to scale back the costs of the barriers. We acknowledge that some of these issues could also be insurmountable; generally institutionalized forces in the acquisition process are stronger than any of the recommendations we’ve made. Several of our recommendations ask managers to restructure their considering and reappraise their company’s acquisition technique. We see your XYZ division as our entry into that enterprise.” While the specifics in such instances are left obscure, each statement contains an goal that may provide useful steerage to the working executives.
To reduce the potential for disagreement during the negotiations and to facilitate closure, the parties typically comply with disagree for the second and postpone decision of inauspicious points. Such practices could assist to provide maneuvering room in negotiations and opportunities to save face in public announcements. They can also assist each parties discover a frequent floor for agreement on seemingly intractable points through the fast-paced negotiations. A extra concrete set of actions to mitigate momentum entails adjusting the incentives to do the deal that the varied parties are experiencing. The CEO and board ought to address the ways that such motives can escalate stress to consummate an acquisition.