SCIENCE
Text: Tuija Rantala and Minna Räikkönen
Managing the M&A process – from opportunities to new business creation As competition tightens, companies are faced with the challenge of business renewal. Acquisitions are an important and rapid way for a company to gain new competence and new business. The danger of failure is real, however, unless the risks have been properly managed.
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ncreasing market competition is forcing companies to grow, internationalise and find new business opportunities. It also requires strong motivation and the willingness to take bigger risks. New business is expected to increase competitiveness, as well as to create opportunities for growth. Mergers and acquisitions (M&A) are a potential and ever-more-widely used means of generating new business. Technology and manufacturing companies are seeking new growth opportunities through services. Companies in mature industries are turning to new markets that fit in with their strategy for the future. Companies are also acquiring innovations to complement or replace their own research and development activity. Creating new business is challenging and associated with numerous uncertainties, especially in the context of M&As, of which it is argued that around 50–75% of cases end in failure. Integrating a newly acquired company may prove challenging, especially where the new business outline lacks a clear vision and an operating plan. In a turbulent business en28
vironment, initiatives, information and viewpoints linked to new business opportunities can come from any direction, from within the company or as a result of a co-operation with customers and other external partners. Research carried out by VTT and the Turku School of Economics (ManMAP – Managing the M&A process – From opportunities to new business creation, www.vtt.fi/manmap) focused on the management of mergers and acquisitions from the perspective of creating new business. Research emphasised companies’ strategic decision-making and risk management in the various phases of acquisition, invariably starting with the identification of new business opportunities, at a point when acquisition is but one among several strategic options when it comes to implementing new business. A total of 28 research interviews were conducted in 14 companies, mainly with M&A directors. The companies in question have vast M&A experience in terms of both growth and internationalisation. Practical tools were developed to support new business creation (NBC) through M&As. VTT IMPULSE – SCIENCE