posted 19 Dec 2008 in Volume 12 Issue 4
Book review: Beyond the Deal: A Revolutionary Framework for Successful Mergers & Acquisitions that Achieve Breakthrough Performance Gains
Author: Hubert Saint-Onge and Jay Chatzkel
Publisher: McGraw Hill
By Matt MoorAEe
Mergers & acquisitions (M&A) – ‘cutting the deal’ – has been a popular past-time for senior executives. Global M&A activity reached a peak of $3.9tr in 2007. However, many studies show these deals are more likely to destroy shareholder value than to create it. Those promised “synergies” don’t always pan out as planned. Now what does this have to do with knowledge management?
The two authors of Beyond the Deal may be familiar to you. Hubert Saint-Onge is famous for his communities of practice work at Clarica and co-authoring one of the few book-length introductions to the topic. Jay Chatzkel has written a book on knowledge capital. So it shouldn’t come as a surprise that their approach to the M&A process is supported by a knowledge-based view of the business world.
The book is divided into two halves – the pre-deal phase and post-deal integration. The audience is primarily the senior executives who shape the deal and the middle managers who implement it.
The knowledge piece gets in early. Chapter 2 starts off with a discussion of intangibles (or intellectual capital as it has been called) – focused on the trio of human, structural and customer capital. It then goes on to discuss knowledge stocks vs flows, explicit vs tacit, etc. If you’ve encountered Sveiby or Edvinsson then a lot of this will be familiar. What’s new is the positioning of a knowledge-based approach at the heart of a successful M&A in Chapter 3.
The authors’ basic point is simple: If your organisation competes on its intangible assets at all, a successful merger must involve an understanding of your acquisition’s knowledge and capabilities. Simple it may be, but it is a point often ignored in the rush to cut a deal at the expense of considering the risks involved.
As a participant in several M&A events (at the level of foot-soldier, rather than general), the book seems very sensible and sane. However, the dominant experience in this situation for most of us outside the boardroom is one of confusion and insanity. ‘Understanding the Emotional Context of an Acquisition’ gets one page – which seems a little light, although other sections do deal with people issues in some more depth.
The book is written in a straightforward way with plenty of case studies broken out in boxes. The authors seem to have sourced these case studies from a mix of stories in the business press, interviews with those involved in shaping M&A and their own first-person experiences. There are a large number from Clarica. Clarica acquired a number of companies until it was acquired itself in 2002 by Sun Life. At that point Clarica’s (and Saint-Onge’s) world-renowned KM programme languished. This book can be seen as his response to that situation – which is far more constructive than sulking (which might have been a more normal response).
KM practitioners in organisations on either side of a merger or an acquisition will benefit from this book. It provides a framework for understanding how the experience should run (and what can go wrong when those responsible don’t appreciate the complexities of the challenge in front of them) – and, more important, ways in which KM can add value in this process.
The takeaway message should be: don’t sell the value of a knowledge perspective in mergers and acquisitions short. The sad thing is that most mergers in the current economic climate are unlikely to be the rational, considered activities that Saint-Onge and Chatzkel suggest they should be. The book has received good reviews but the real measure of its success will be if those who read it can implement its recommendations and create value rather than destroy it.