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By Bob Becker
In this feature article, a former Senior Vice President at Mercury Computer Systems outlines what went right and what went wrong with a key acquisition. A major part of the challenge had to do with R&D investment in the acquired company. Writes Becker, “All the corporate norms and systems for how investment funds were allocated were stacked against adding dollars for R&D; those R&D dollars were needed to evolve the product family – to either grow it as a business or achieve some of the strategic goals by working on new products with the rest of the corporation.” Before the savings from merging the manufacturing operations were realized, low R&D investment had turned the acquired organization into a sustaining engineering group, unable to add much value in the form of innovative new products. Overall, Becker reports that well-intentioned choices with respect to the acquired entity caused the operation to become out of sync with the core strategy, frustrating the workforce and leadership alike with a lack of clarity and inconsistent direction. The result was that people and assets related to the acquired entity became some of the first jettisoned when times got tough.
(5 pages)
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Research | Posted: 2006-01-06