Pest Management Professional, September 2013

MERGERGUIDE2013 M A LESSONS FROM OTHER INDUSTRIES Not all merger and acquisition deals succeed Experienced M A broker Norm Cooper offers examples from which PMPs can learn By Norman Cooper Contributor I f youre considering buying or selling your pest management company or are part of a management team charged with making a merger succeed various lessons can be learned from merger and acquisition M A deals in other industries that either worked out or turned ugly Lets first examine two high profile mergers outside the pest management industry that failed Why mergers arent always a Snapple When Quaker Oats acquired Snapple for 17 billion in 1994 it thought it could repeat the success it had when it acquired Gatorade and leverage the relationships it had with large retailers and grocers They found out the hard way that after eliminating much of Snapples sales and distribution team more than half of Snapples revenues came from small retailers such as convenience stores and gas stations Quaker Oats failure to understand how different the acquired company was in terms of sales distribution and systems led it to make huge errors and lose critical people Within two years of the acquisition Snapples revenues declined from 700 million to 500 million After 27 months of ownership Quaker sold Snapple for 300 million a loss of 14 billion Polar opposites can create cold cultures Sprints acquisition of Nextel in 2005 for 35 billion was supposed to combine two second tier telecommunications companies into the third largest telecommunications company in the U S Before the merger Sprint served the consumer market mainly with local and long distance wire line telephone services as well as a wireless service It also had a reputation for poor customer service and the highest churn rate in the industry Nextel was a pure wireless company with a strong business presence particularly among customers with local transportation and logistics needs because of Nextels exclusive press and talk feature Both companies served different markets and had different infrastructure systems After the merger many of the most talented Nextel people left the combined business citing cultural differences and incompatibility While Nextel was entrepreneurial and customer service oriented Sprint was bureaucratic and wasnt customer service orientated they said While the combined company dealt with infighting and internal problems of integration AT T and Verizon were able to focus on upgrading their networks making deals with phone manufacturers to get exclusive deals for the iPhone and other popular phones and focus on customer retention By 2008 Sprint had to write off 30 billion of its 35 billion acquisition Now lets study two high profile mergers outside the pest management industry that succeeded Integration details and experience key InBev which started in Sao Paolo Brazil is the worlds largest beer company as a result of acquisitions throughout the world culminating in its acquisition of Anheuser Busch in 2008 InBevs growth was driven by a successful M A strategy a repeatable method of mergers and acquisitions supported by a disciplined management system InBev formed by the merger of Interbrew formed in 1987 by the merger of Belgiums two largest brewers Artois and Piedboeuf and AmBev created in 1999 by the merger of the two largest brew M10 September 2013 Pest Management Professional www mypmp net