Updated on February 2, 2008
Yesterday’s news about Microsoft’s unsolicited $44.6 billion (£22.6bn) bid to acquire Yahoo has, unsurprisingly, made headlines around the world.
Plenty of commentators have been quick to analyse what the combination might mean to the tech business and, in particular, search and online advertising. A common conclusion is that it’s all about Microsoft becoming far more competitive to tackle Google.
My second thought on hearing the news yesterday morning – my first thought was simply "Wow!" – was thinking about the enormity of welding together these two global businesses and the many organizational and communication challenges involved.
You think Microsoft’s mainly about desktop software and Yahoo is mainly about search? Think again – just look at this comparison of both companies’ businesses:
This very useful chart was created by Long Zheng and Josh Philips.
Even though it misses a couple of areas, it does provide a great overview of what each company offers in the market, and how each company’s offerings compare.
And it does provide an indicator of the complexity in bringing together these two companies, not only from the business area point of view but also from the organizational point of view.
Two different cultures, different organizations, thousands of employees scattered around the world (with their micro-cultures in different countries), different ways of doing things, and so on.
It brings to mind my own experience in going through an acquisition back in 2003-2004 when I worked for an enterprise software company that was acquired by a competitor.
And it reminds me of two critical areas I focused on when I prepared my initial communication plan for my board of directors, drawn from How Communication Drives Merger Success, an excellent publication from the IABC Research Foundation:
Characteristics of Most Successful M&As
- Permanent integration team
- Cross-functional integration team with members from both companies
- M&A manual
- Pre-merger cultural assessments
- Checklists of potential problem areas
- Communication strategies that match the M&A motive
- Both formal and informal communication tactics used
- Use of professional communicators
- Consistency between initial promise and implementation
Characteristics of Least Successful M&As
- Discount role of professional communicators – “It’s not rocket science”
- Treat all M&As alike – “If it worked for one, it will work for all”
- Do financial due diligence only – no cultural or systems audits
- Over-use formal communication and under-use informal communication
- Focus mainly on external media and the financial community – not employees
- Put too much emphasis on being fast and keeping the deal secret
- Don’t tailor communication to meet individual audiences’ needs – especially employees
Looking back, I’d add one more the the list of least successful – don’t call it a merger and, especially, not a ‘merger of equals.’
There is no such thing as a merger; there are only acquisitions.
I offer no suggestions or recommendations here on addressing the complexities confronting Microsoft and Yahoo, purely noting those complexities.
If this deal actually does happen. It’s only an offer at this early stage, an unsolicited one at that. And another acquisitive contender could well emerge to make things even more interesting.
Whatever happens, this will be one heck of an exciting time for the communicators in both companies.