Meg Whitman’s 4-step guide to killing acquisitions

Some executives just don’t learn from past mistakes. Acquisitions can be ugly if you simply repeat a process that has yet to work. Columnist Rob Enderle says HP’s Meg Whitman is the prime example.

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As we ramp up for RSA, it is interesting that one common cross vendor theme is coming up. HP’s ArcSight installed base has become the great SIEM [Security Information and Event Management] hunting ground. Meg Whitman has effectively killed yet another HP acquisition. Having been through some ugly acquisitions myself, I try to use every example of contrasting how to do these things right vs. how to do them very wrong. It seems that some executives either don’t want to do it right or they never really read the current definition of insanity “doing the same thing over and over expecting a different results.”  

Don’t get me wrong, before Whitman came on board HP was kind of legendary for killing acquisitions. VoodooPC and Palm’s destruction were only the latest of a long string of firms HP bought and then systematically killed, wiping out millions to billions of value in what appears to be four easy-to-follow steps. Despite HPs past success in this area, Meg Whitman is turning doing it into a science. There appears to be no one better at killing acquisitions today than HP.

So this week, rather than focus on the firms that do this right, let’s focus on that magical skillset HP has for doing this masterfully wrong using ArcSight as the example.

Step 1: Fire or separate the CEO

Typically, if you buy a company that is successful a great deal of that success comes from the executive team at the top and the inherent loyalty between the team members. In your effort to destroy the value you have acquired in the most efficient way, this is the best place to start. You can separate and nullify the top executives giving them largely meaningless jobs that have little to do with their skill set, or more effectively, just let them go.

This typically starts the bleeding of talent out of the company from the top down and sends a clear message that the acquiring company doesn’t care about the people. The smart employees (the ones who might save the company) see this happening early in the process and start refreshing their resumes and go looking for new jobs or to simply retire.

Step 2: Integrate

A successful company isn’t just about its leadership. It is successful because of its internal organization, its connection with its customers and its unique structure that allowed it to succeed when the majority of new firms failed. So blow that the hell up!  

What you do is you slam your organizational structure and rules into the acquired firms, change titles and spans of control, and place new people between the firm’s customers and products. This makes the company less successful, it alienates employees and customers and grinds R&D to a halt. You’ve effectively driven the firm into an iceberg by disrupting the senior staff. Now you can focus everyone else on rearranging the deck chairs so the firm has no chance of digging itself out of this mess.  

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