What is Acquisition Integration Approaches ?

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The Acquisition Integration Approaches model of Philippe Haspeslagh and David Jemison provides insight and guidance in Mergers and Acquisitions (M&A on choosing the optimal integration approach. Each approach describes a process by which a company plans for and implements a successful integration of a newly acquired company.

In Mergers and Acquisitions, the motto often traditionally was: “Make them like us.” Alternately, relatively simple criteria were used to choose an approach (e.g., the size and quality of the acquired firm).

Haspeslagh and Jemison in 1990 stated that in the Acquisition Integration Approaches model, the company takes for the integration should be understood by considering 2 criteria:


a. Strategic Interdependence

This refers to the combined value created after acquisition which should obviously be greater than the value of both the firms combined together. Value creation can be in many forms like increased resources, skills or combined benefits.

b. Organizational Autonomy

Haspeslagh and Jemison warn that managers must not lose sight of the fact that the strategic task of an acquisition is to create value. Furthermore they must not grant autonomy too quickly, although obviously people are important and should be treated fairly and with dignity.


Based on the differential need for the above two factors, Haspeslagh and Jemison have defined the following four approaches of effective acquisition-integration-



1. Preservation

Here the focus is to preserve the acquirer’s autonomy and nurture the second firm under it.

2. Symbiosis

This is a very difficult task where both the factors have to be satisfied and work moves gradually.

3. Holding

Here, the focus is mainly to create value through financial resource sharing and autonomy needs are low, i.e. integration is not given much weightage.

4. Absorption

This approach is highly inclined towards focusing on generating the required value from the acquisition even if that might demand a loss of autonomy or slower/lesser integration.
 
The Acquisition Integration Approaches model of Philippe Haspeslagh and David Jemison provides insight and guidance in Mergers and Acquisitions (M&A on choosing the optimal integration approach. Each approach describes a process by which a company plans for and implements a successful integration of a newly acquired company.

In Mergers and Acquisitions, the motto often traditionally was: “Make them like us.” Alternately, relatively simple criteria were used to choose an approach (e.g., the size and quality of the acquired firm).

Haspeslagh and Jemison in 1990 stated that in the Acquisition Integration Approaches model, the company takes for the integration should be understood by considering 2 criteria:


a. Strategic Interdependence

This refers to the combined value created after acquisition which should obviously be greater than the value of both the firms combined together. Value creation can be in many forms like increased resources, skills or combined benefits.

b. Organizational Autonomy

Haspeslagh and Jemison warn that managers must not lose sight of the fact that the strategic task of an acquisition is to create value. Furthermore they must not grant autonomy too quickly, although obviously people are important and should be treated fairly and with dignity.


Based on the differential need for the above two factors, Haspeslagh and Jemison have defined the following four approaches of effective acquisition-integration-



1. Preservation

Here the focus is to preserve the acquirer’s autonomy and nurture the second firm under it.

2. Symbiosis

This is a very difficult task where both the factors have to be satisfied and work moves gradually.

3. Holding

Here, the focus is mainly to create value through financial resource sharing and autonomy needs are low, i.e. integration is not given much weightage.

4. Absorption

This approach is highly inclined towards focusing on generating the required value from the acquisition even if that might demand a loss of autonomy or slower/lesser integration.

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