On the second day of Nasscom India Leadership Forum 2011, business leaders from the Indian outsourcing industry got together to share their insights on how to make M&As work.
Beyond financial due diligence and strategic fit, people are the key to a successful integration. CP Gurnani, CEO, Mahindra Satyam said, “You not only need the balance sheet of the company you are going after, you need the people as well.” M&As do not work out if the leadership does not understand the people and take them into confidence, he said.
Emphasizing the need for cultural and emotional alignment of the target company people with the culture and environment of the acquirer, Aparup Sengupta, Managing Director, Global CEO, Aegis said that at the heart of M&A lies how you do the integration. A veteran of 16 acquisitions, Aparup believes in connecting with the core emotions of the target company people. “At Aegis, we talk of right practice, not best practice,” he said.
Talking about his experience in integrating TechMahindra with erstwhile Satyam, Gurnani said the best weapon in such a situation and in fact, in any acquisition, is a great HR department that realizes the complexity of the process and their vital role in the transition.
Another vital factor is the understanding of each other’s motivations, aspirations, and internal structures. Several M&As that started ambitiously failed due to lack of understanding of each other’s structure, culture, and the global market operations, said moderator Kumar R Parakala, COO, KPMG Advisory.
At the end of the day, an acquisition requires an understanding of why it is being done, and what will be the outcome. “M&A is the outcome of a strategy. You have to envision the purpose of company you are forming,” said Sengupta.