HP has been in the news with rumours that the company is getting ready to lay off a number of employees. A report published on the Business Insider website lists a number of points regarding layoffs past, expectations of future layoffs, and some comments about past deals. I found the following comments attributed to HP Enterprise Services (HP ES) folks interesting because they illustrate that even many years later EDS integration into HP is not complete.
The HP ES team never felt integrated with the rest of HP. When HP bought EDS, it just about doubled the size of HP. EDS had 139,500 workers and HP had 172,000.
Notice in this quote below someone refers to ‘the HP side’. Clearly the HP ES employees who came on board from EDS do not see themselves as HP.
The cost overruns that Meg Whitman complained about in March were caused by “the HP side,” an ES employee said. HP took over the management of EDS’s IT tools, like its telephone system. They added staff to manage the tools and charged the extra staff back to what used to be EDS. “Is it any wonder that HP ES’s costs rose 10% last fiscal year?”
M&A provides great opportunity to companies when done right. When don’t wrong it can be not only costly but also a risk to the survival of a company. Research from the Kellogg School of Management shows that default risk rises for acquiring firms. While a default due to a merger & acquisition deal is rare shareholder value destruction is far more common.