How to Integrate an Acquired Company: Lessons from IBM

These days, mergers and acquisitions are an increasingly important part of corporate strategy. But when one company acquires another, a lot of things have to happen to make the deal right. In fact, most mergers fail—and most of the time, it’s not because of the strategy behind the deal or the negotiation process. Instead, the key to making the deal right is successfully integrating a company after a merger.

That’s according to Moni Miyashita of IBM (NYSE: IBM). A few weeks ago, I had the pleasure of meeting Miyashita, the managing director of mergers and acquisitions integration at Big Blue. Heading into the new year, I figured Seattle-area companies—and tech companies in general—could use a fresh perspective on deal integration.

Miyashita, who is based in Armonk, NY, knows a thing or two about the topic, given that IBM has spent more than $15 billion on acquiring 70-plus companies while she’s been at her post. Miyashita says her team is currently supporting the leaders integrating some 17 companies into the IBM machine. “She has institutionalized the M&A capability within IBM,” says Eddie Pasatiempo, a partner at The Clarion Group based in Kirkland, WA (and an Xconomist).

Some quick background before I get to Miyashita’s M&A lessons. Mergers and acquisitions are at the core of the growth strategy of IBM, which in the past several years has divested some of its hardware portfolio and has made strategic acquisitions in software and services. Since 2004, IBM has bought more than 40 software companies while getting proceeds from divestments such as the $1.8 billion sale of its personal-computer division to Lenovo. (IBM hasn’t made many acquisitions in the Northwest, but it did buy Bellevue, WA-based Vallent in late 2006, and Beaverton, OR-based Sequent back in 1999.) “We’ve used acquisitions to help transform our company,” Miyashita says.

As I understand it, successful integration requires taking the time to … Next Page »

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Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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