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Speed Review: Capitalize on Merger Chaos

Speed Review: Capitalize on Merger Chaos

Speed Review: Capitalize on Merger Chaos

Six Ways to Profit from Your Competitors' Consolidation and Your Own

by Robert Lamb & Thomas Grubb

Grubb and Lamb explain why your competitor’s merger can be the best thing that ever happened to your company and provide strategies for taking advantage of this key opportunity.


Competitors Merging? Here's Your Chance
When Compaq merged with Digital Equipment Corp., Michael Dell of Dell Computers reacted with delight: "I gotta believe these guys handed us a huge gift," he said. As it turns out, he was absolutely right. In Capitalize on Merger Chaos, authors Thomas M. Grubb and Robert B. Lamb explain why your competitor's merger can be the best thing that ever happened to your company and provide strategies for taking advantage of this key opportunity.

Grubb and Lamb maintain that "today's continuous record-breaking levels of mergers and acquisitions present your firm with an astonishing new wealth of opportunities to break away from competitors like no other time in business history." They point out that an astonishing 80 percent of mergers fail - most companies undergoing mergers typically erode shareholder wealth; create years of chaos, fear and turmoil for employees; and end up taking missteps that leave them perfectly positioned to lose the battle against their competition. Bad news for your merging competitor, but good news for you - if you know how to best take advantage of the resulting chaos.

Six Strategies
To capitalize on merger chaos, Grubb and Lamb provide six strategies for profiting from consolidation:

  1. Create a magnet strategy. This entails creating a strategy to attract and retain your competitor's best people while they are in the midst of chaos. The strategy allows a double win: You weaken your competitor, while strengthening your own firm.
  2. Attack while competitors are distracted. Grubb and Lamb explain that most companies undergoing a merger lose their ability to see, much less respond to, the attacks of competitors.
  3. Jump start vital internal change. Use a threatened merger by your competitor to put in motion the changes your company needs to make to maximize your market position.
  4. Consider merger alternatives. Joint ventures, strategic alliances, franchising, and licensing agreements can multiply your resources by leveraging those of your partners, without the chaos of undergoing an actual merger.
  5. If you do pursue a merger, make fast-track merger integration a priority. As Grubb and Lamb point out, no manager has ever underestimated the potential difficulties of pursuing a merger. To minimize outcomes such as the loss of key people, the erosion of morale, and outright chaos, you must streamline and accelerate the process as much as possible.
  6. Utilize a composite strategy. The business world is too complex for a single strategy to propel you to success. Thus, say Grubb and Lamb, the "ultimate weapon" to capitalize on your competitor's merger chaos is a composite strategy.

Dell Takes Advantage
In fact, that's exactly what Dell - delighted by the gift Compaq had just provided with its merger - did; they utilized a composite strategy to make the most of the opportunity and emerge as the industry leader. Dell took a number of key steps, including launching a barrage of marketing and sales attacks; partnering with IBM in several crucial deals; opening, an Internet retail store; and finally, announcing its first acquisition, ConvergeNet Technologies, Inc. In just over a year, Dell sprinted ahead of Compaq and all other competitors to emerge as the PC leader of the world.

With mergers likely to remain an important part of the business landscape, this book is essential reading for anyone who senses a merger is imminent in their industry - whether for the competition or for their own company.