> But it just isn't that simple - this was a large multinational with ossified internal procedures that were baked into the very infrastructure (both physical and IT) of the company. Things were never going to change overnight.
I mean, it could have been that simple: #2 could have just entirely liquidated #3 and taken over their brands, marques, and physical assets like buildings, without retaining a single employee or officer of #3; or if they did keep the employees, it would just be by putting them into an "internal talent pool" where they're being paid to do nothing for a month or two, while they get filtered through #2's HR department as if they were new hires, either being placed in #2's structure or dropped.
This would mean that #3 would be essentially erased from the marketplace at the moment of acquisition: no further revenues, but no costs either, all creditors paid off by #2, etc. #2, however, would also immediately be free of the effects of #3's competition on their bottom line, which might balance out that lack of #3-revenue for them quite well. Many customers previously using #3 would find that they had simply stopped communicating or delivering on their promises for a period—and if they were going to switch allegiances based on that, who better to switch to than their still-business-as-usual acquirer, #2?
And, of course, presuming #2 already had logistics pipelines feeding the same markets as #3, and produced essentially-indistinguishable products from #3, it wouldn't take long to just start producing #2 products with #3 brands slapped on them and start sending them to their new base of #3 customers, to return things to normal. (But in the mean time, they'd have already received many of those customers as switchers to #2, without having to "fool" them with the #3 brand.)
I believe this is the strategy employed by one of the big successful examples of M&A: Anheuser-Busch InBev. When the beer giant acquires another brewer, they don't keep them making beer; they just tear them apart, throw the acquired company away, and suddenly customers of MomNPop Beer Co. are drinking AB InBev beer in a MomNPop can. (They don't even keep the MomNPop brewery itself; there are economies of scale that make operating a bunch of small breweries silly compared to operating one huge megabrewery. They just strip it, sell the equipment for scrap—because otherwise they'd be encouraging someone to start another competitor!—and then sell or rent out the land, if owned.)
> I mean, it could have been that simple: #2 could have just entirely liquidated #3 and taken over their brands, marques, and physical assets like buildings, without retaining a single employee or officer of #3
Oh my goodness.
So, they would have bought this existing large multinational, with a huge existing client list, base of installed product, all sorts of SLAs and support contracts, all sorts of infrastructure for supporting all of that, etc, and immediately fired everyone who knows how to manage it all!?!?!? And what, then just immediately hire several thousand people to replace them 24 hours later, and have every single one of them up and running and productive in a jiffy?
> This would mean that #3 would be essentially erased from the marketplace at the moment of acquisition
Yep. . . followed by #2 being erased from the marketplace by lawsuits within a year or two.
> all sorts of SLAs and support contracts, all sorts of infrastructure for supporting all of that, etc
We're talking about different verticals, here. Product businesses can get away with this. Service businesses probably can't.
Even in service industries, though, there's a simple hack: when #2 acquires #3, they keep #3 running for a few months, but they make #3 push a change to the SLA, where service provided by #2 in lieu of service provided by #3 will be considered an acceptable service-level. They only begin liquidation of #3 once all #3 customers have signed onto the new SLA. Then, when the lights are turned off on #3's infra, all #3 customers are temporarily just provided with #2 services.
Again, this is mostly a thing with product businesses, or, say, logistics providers, where the product/service is "pushed" to the customer by the provider, and the customer doesn't need to change how they do things, they just need to take receipt of the alternate product/service from the new provider for a while. "MomNPop beer is unavailable for a month, but here's a truckload of existing AB InBev 'indie-branded' stock to put in its place until we get our new marque spun up."
This is less of a thing if we're talking about a "demand"-driven business, like, say, a SaaS API provider, where the customer has to communicate to #2 or #3 through an API, and they have different APIs. This can still be made to work, but it's all about how long the transition period takes. Google's purchase of Nest looked like this, with a transition period of two years. But it wasn't temporary; with a transition period like that, you may as well just shutter the #3 "API" entirely.
(Example I can think of where this does happen in a service industry: cell-service MVNOs getting acquired by their own infrastructure provider. If ISP #3, an MVNO who uses ISP #2 as their network, gets bought by #2, there's nothing in #3 that #2 wants or needs, other than their customers, and maybe #3's brand value. So they just tell #3 customers that they're going to be #2 customers for a while (i.e. their phone will be "roaming" onto #2's network all the time, but they'll be charged regular #3 prices for it.) Either every customer from #3 is then pivoted into being a "real" #2 customer; or, if #2 keeps the #3 brand around, their #3 service starts working "normally" again a while later, as just a marque of #2 (if they stuck around with #3 instead of checking the box on their monthly bill that offers to switch them to #2.)
> and immediately fired everyone who knows how to manage it all!?!?!? And what, then just immediately hire several thousand people to replace them 24 hours later, and have every single one of them up and running and productive in a jiffy?
You don't hire the "new"-from-#3 employees to service the #3 accounts. #2 employees service the from-#3 accounts. #3 employees come in at the bottom, as if they were outreach hires.
> followed by #2 being erased from the marketplace by lawsuits within a year or two.
I mean, not if #2 doesn't own #3 when it liquidates, they don't. A company doesn't have to literally acquire another company; they can just pay it to commit suicide, and then pick up the pieces. Who do you sue, if your provider-of-choice #3 just decides to fold?
Or, even more sneaky, #2 can just figure out a way to enter into some kind of financial arrangement with #3, where it then slowly squeezes #3 to death... and then picks up the pieces. (Do you know what happened to Target in Canada? Do you know why? Hint: all the land the Targets operated on was leased to them... by Walmart! And now, after Target set them up nice and neat, and then got squeezed out of the market, they are Walmarts.)
I mean, it could have been that simple: #2 could have just entirely liquidated #3 and taken over their brands, marques, and physical assets like buildings, without retaining a single employee or officer of #3; or if they did keep the employees, it would just be by putting them into an "internal talent pool" where they're being paid to do nothing for a month or two, while they get filtered through #2's HR department as if they were new hires, either being placed in #2's structure or dropped.
This would mean that #3 would be essentially erased from the marketplace at the moment of acquisition: no further revenues, but no costs either, all creditors paid off by #2, etc. #2, however, would also immediately be free of the effects of #3's competition on their bottom line, which might balance out that lack of #3-revenue for them quite well. Many customers previously using #3 would find that they had simply stopped communicating or delivering on their promises for a period—and if they were going to switch allegiances based on that, who better to switch to than their still-business-as-usual acquirer, #2?
And, of course, presuming #2 already had logistics pipelines feeding the same markets as #3, and produced essentially-indistinguishable products from #3, it wouldn't take long to just start producing #2 products with #3 brands slapped on them and start sending them to their new base of #3 customers, to return things to normal. (But in the mean time, they'd have already received many of those customers as switchers to #2, without having to "fool" them with the #3 brand.)
I believe this is the strategy employed by one of the big successful examples of M&A: Anheuser-Busch InBev. When the beer giant acquires another brewer, they don't keep them making beer; they just tear them apart, throw the acquired company away, and suddenly customers of MomNPop Beer Co. are drinking AB InBev beer in a MomNPop can. (They don't even keep the MomNPop brewery itself; there are economies of scale that make operating a bunch of small breweries silly compared to operating one huge megabrewery. They just strip it, sell the equipment for scrap—because otherwise they'd be encouraging someone to start another competitor!—and then sell or rent out the land, if owned.)