cameron and green making-sense-of-change-management

Mergers and acquisitionsSelden and Colvin put the problems down to companies failing to lookbeyond the lure of profits. They urge CEOs to examine the balancesheet, and say that M&As should be seen as a way to create shareholdervalue through customers, and should start with an analysis of customerprofitability.However, this contrasting quote from Alex Mandl, CEO of Teligentsince 1996, in a Harvard Business Review interview (Carey, 2000) provides adifferent view:I would take issue with the idea that most mergers end up being failures. Iknow there are studies in the 1970s and 80’s that will tell you that. But whenI look at many companies today – particularly new economy companies likeCisco and WorldCom – I have a hard time dismissing the strategic power ofM&A. In the last three years, growth through acquisition has been a criticalpart of the success of many companies operating in the new economy.Carey’s interview occurred before the collapse of Enron and WorldCom,so he did not know what we know now. The recent demise of both Enronand WorldCom due to major scandals over illegal accounting practiceshas considerably dampened enthusiasm for merger and acquisitionactivity worldwide. These events have raised big questions about companiesthat finance continuous acquisitions as a core business strategy. Theuse of what BusinessWeek describes as ‘new era’ accounting is makinginvestors nervous, and causing companies to be very careful with theirinvestments and their financial reporting.Public sector mergers, such as the Inland Revenue merging withCustoms and Excise in the UK, have been plagued with problems, and infull public view. However, the Ofcom merger, which brought togetherfive regulators into one organization, was seen as a great success.The National Audit Office blame the public sector merger difficulties onthe leadership vacuum between those who decide on the merger andthose who are to implement it. Also, the amount of time taken by thelegislative process and consultation requirements leads to much greateruncertainty for staff and stakeholders than in the private sector.The discussion about the overall success rate of merger and acquisitionactivity still continues. But what lessons can be learnt from previous experienceof undertaking these types of organizational change?229