In the book Anna Karenina, Leo Tolstoy opens with the line; ‘all happy families are alike; each unhappy family in unhappy in its own way.’ When it comes to business growth, it can be generalized. However, business failure is unique. No business fails in the same way, but all businesses tend to grow in the same way.
SAP is one of those superior companies, the kind that’s going to stay the test of time. It’s embedded in many organizations, it’s the holding system of many other systems. It just works. For large-scale industrial operations processing lots of data, SAP is that one system that just never breaks. It works!
Yet, when you delve into SAP, you realize it’s also grown through mergers and acquisitions. If you think in terms of fractals, you see that every other organism in the world grows in the same way. Higher species imbibe lower species to grow. No species grows without taking up another in its fold. True growth it seems is a factor of mergers and acquisitions. It is also likely that no business can innovate at the scale of the market. Acquisitions give businesses the ability to consolidate all these innovations at the different frontiers thus enabling a sustained growth.
To-date, SAP has made 75 acquisitions. Coming back to East African Breweries Limited (EABL), a poster child of growth in the region, it’s also been on the bedrock of acquisitions. Think of its major brands such as White Cap, all were the result of acquisitions. Uganda Waragi that’s a key player in the mainstream spirits segment was also the product of EABL’s acquisition of International Distillers Uganda Ltd (IDU).
Yet, although mergers and acquisitions (M&As) are a sure way to growth, most M&As can turn out to be disastrous. Sometimes, the acquired brand suffers, and sometimes the acquirer brand suffers. There’s no one way to do it right. M&As tend to obey Murphy’s law that anything that can go wrong will go wrong.
In navigating this complex terrain, organizations must exercise prudence and foresight, recognizing that success is not guaranteed. Rather than viewing M&As as a panacea for growth, companies must approach them with caution, mindful of the inherent risks and challenges they pose.