The Post-Acquisition of an Entrepreneurial Company by a more Staid Acquirer

After an entrepreneurial telecommunications company had been acquired and merged into a larger and more established telecom group, I asked a senior manager how did the management culture change? He answered, that, prior to the merger, whenever a group called a meeting and one participant could not make it, the meeting went ahead anyway.  After the merger, the procedure was totally different – whenever a meeting would be called and one participant could not attend, the meeting would be rescheduled and postponed. The manager distilled in a few words on how fast and nimble companies operate versus the staid and conservative ones.  The entrepreneurial company takes risks and knows that to succeed, it must move forward constantly. The management teams from established and conservative companies take fewer risks and, therefore, they have more political issues – as if not to jeopardize their jobs.

Companies which fail to move forward quickly risk losing market share or new business opportunities. Scores of consulting companies advise companies on how to be more creative, but being creative is hard to implement when the corporate culture is risk adverse and does not move forward.

That same merger did not produce the results expected from the integration.  Unfortunately, senior management did not take into account that the culture of the acquiring company would dominate the culture after the integration. The acquiring company decided to relocate the operations to the mid-West, even though the acquired company’s principal office operations only existed in the East Coast. Between the cultural change and the relocation, the new company lost many excellent and creative managers from the target company. And, since the purpose to acquisition was to catch up to the two top players in the industry, the company has stalled and now seeks a new strategy for growth or even survival.

Recent news suggest a similar scenario in the IT industry – Yahoo’s acquisition of Tumblr. And to quote Yogi Berra, Déjà vu all over again.  Here we have an acquirer stumbling to regain a foothold against the competitors.  It is acquiring another company geographically Imageremoved from the acquirer. The younger company is substantially more entrepreneurial and more nimble. We will see if Yahoo, being the acquirer, will stifle Tumblr or let it succeed in spite of Yahoo’s more established corporate culture.


About Juan Ramón Zarco, SVVGP 胡安•雷蒙•扎尔科

Juan Ramon Zarco, 胡安•雷蒙•扎尔科, Silicon Valley Ventures Growth Partners llp, Hygieia Healthcare Technologies Company, AllRest Technologies LLC, Crimson Growth Partners LLP,, is an experienced as CxO, General Counsel and Secretary to public and private companies with global operations. Established track record of producing practical, revenue-focused solutions. As Counselor and Secretary, demonstrating vision, integrity, and sound business judgment, to CxOs. Managed complex, strategic transactions, M&A, contracts support, PE Financing, IPO, SEC compliance, Corporate/HR governance, IP licensing, Budgeting, Staff, outside counsel management, International market access strategies, Domestic & foreign government relations and advocacy. Creative in designing and implementing market access strategies. Practices law beyond conventional model with low-overhead and project-based fees. Effective at managing departments, formulating marketing strategies, balancing budgets, and implementing cost-saving measures. Extensive in-house and private practice experience, advising clients on commercial, corporate, international business, and technology law and policy.; For Sprint, he managed iDen international development in Southeast Asia, Middle East, and Africa, and contractual issues with Verizon. In Private Equity, he worked with Pegasus in vetting international investment deals and interim President for portfolio companies, such as Data Foundation, a data storage company, handling marketing, strategy, fund raising, and accounting. Before Pegasus, Mr. Zarco, as CLO and V.P. of Corporate Development, played a principal role in the structuring, international expansions for 2 telecom companies, U.S. Cable Group and Viatel, Inc. in financing and M&A deals exceeding $200 million. Mr. Zarco earned a J.D. from NYU Law School, M.B.A. from Cornell, and B.A. from Williams College; is fluent in Spanish, Portuguese, French, and German, with working knowledge of Russian, Arabic and Japanese.
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One Response to The Post-Acquisition of an Entrepreneurial Company by a more Staid Acquirer

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