Wednesday, April 17, 2013

How to Buy a Company by Hiroshi Mikitani

English: Hiroshi Mikitani, CEO of Rakuten, at ...
Hiroshi Mikitani (Photo credit: Wikipedia)
It would be wrong for me to try to teach you how to buy a company because I have not bought one yet. However, I can do the next best thing- share with you what someone who has done so successfully has to say. Enter Hiroshi Mikitani, whom apart from having such a cool name is the CEO of Rakuten Inc. which is a very successful Japanese company that is focused on helping merchants deliver "Omotenashi"...

How to Buy a Company

There are two types of growth in the business world: growth you build and growth you buy. Today, I’m going to talk about the latter.

In the history of Rakuten we have made dozens of acquisitions. Some were big and drew headlines such as our acquisition of Canadian e-reading company Kobo. Many others were quite small – companies with little reputation outside their niche industries. But big or small, acquisitions are an important part of the Rakuten strategy. I see every acquisition not just as a way to make money, but as an opportunity.

When two companies enter into a merger and acquisition agreement, they make the most serious commitment to each other than the business world allows. They are agreeing to move forward as one. I know many in the M&A business see acquisition as purely a financial strategy. I view it as a way to begin a long and profitable relationship between companies and even between countries.
How to do it right:
  • Look for cultural synergy. When we begin to talk to a potential acquisition, the first topic we explore is company culture. We talk about Rakuten “Shugi” – the mission, values and practice that define our corporate culture. We talk about everything that makes up the Rakuten “Way” from how we have embraced English as our corporate language to how all of us – from executives to the newest hires – clean up our workspaces ourselves every week. The culture fit is the foundation of any acquisition.
  • Buy for tools. Many of our acquisitions come onto our radar because they have developed a key tool – software or other intellectual property, or expertise in an area outside our core. When we make that deal we are adding a tool to our kit that allows us all to perform at a higher level.
  • Buy for new markets. Expansion into new markets is the goal of any global business. Building from the ground up in a new market takes time. Buying the right company in a new market can speed that entry with a built in set of customers.
Acquisitions can be complicated. The key to success is making the right moves at the outset. This sets the stage for a successful combination.

 Source: LinkedIn

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