There was a great article, “Acquisitions That Make Your Company Smarter” by Nima Amiryany and Jeanne W Ross, in the MIT Sloan Management Review that showed why many companies fail to integrate successfully the knowledge and processes from companies they acquire, even if the acquisition was to acquire the knowledge. It is a phenomenon that I have seen repeatedly, where large game companies will acquire smaller companies to give them international expertise, experience leveraging IP, knowledge of a new platform, etc., yet fail to integrate that information and best practices into the parent organizations. It ends up lessening the value of the acquisition and often disheartening the experts who were acquired and see areas they can improve the parent’s business.
Acquisitions focused on incorporating knowledge are fundamentally different than other acquisitions. The expertise of the acquired company represents a crucial part of its collective knowledge that gives it a competitive advantage. The acquiring company is interested in something that a group of people have created that involves their vision, ways of working together and approach to carrying out certain activities. The acquiring company is primarily interested in the skills and processes, not the products, of the target company.
One of the best examples of such an acquisition was Disney’s acquisition of Pixar in 2006. By purchasing Pixar, Disney brought in knowledge of cutting-edge animation that it did not have. Thus, the success in the deal should not be measured just by the profit from Pixar’s pictures but also from the incremental profit Disney captured with all of its animated films.
Another example is Pfizer’s purchase of Icagen (now Neusentis) in 2011. This deal gave Pfizer expertise in pain research that it previously did not have.