This document discusses GE Capital's approach to integrating acquisitions. It outlines 4 key lessons learned: 1) Integration planning begins with due diligence, not after signing; 2) Integration requires dedicated management; 3) Decisions about integration like restructuring need to happen quickly; and 4) Successful integration requires blending cultures by getting people working together. GE Capital realized integration is a process, not a discrete phase, and established integration manager roles to focus on people issues. It also stresses the importance of rapid communication and addressing cultural challenges head-on post-acquisition.

1. Making the Deal Real: How GE
Capital Integrates Acquisitions
Prepared by:
Gauher Equbal

2. No wonder most managers think
about how to get acquisitions over
with – not how to do them better.

3. Need for Improvement in Integrating
Acquisition
•Industry Consolidations
•Globalization of
Competition
•Technological
Developments
•Takes years to realize
synergy
•Unique Capabilities may
dilute
Therefore, it is increasingly important for executives
to learn how to manage the integration of acquisition
as a replicable process.

4. GE Capital – Introduction
•Founded in 1933 as a subsidiary of the General
Electric
•Provide consumers with Credit to purchase GE
appliances
•Major Financial Conglomerates with 27 separate
businesses
•More than 50,000 employees worldwide
•$2.8 billion net income as of 1996
Private-label Credit
Card Services
Commercial
Real Estate
Financing
Railcar and Aircraft
Leasing
Businesses

5. GE Capital – Growth through
Acquisition
100+ acquisition in 5 years, resulted in :-
•30% increase in its workforce
•Rapid Globalization of its businesses
•Doubling of its net income
•Core capability and Competitive advantage

6. Acquisition - Shapes and Sizes
•Portfolio or asset
purchase
•Consolidating
Acquisition
•Fresh Territory
•Hybrid
Chase Manhattan
bank’s leasing
business
Travelers
corporation
mortgage services

8. GE Capital
The Four Lessons

9. LESSON 1
Acquisition Integration is not a
discrete phase of a deal and does
not begin when the documents are
signed. Rather, it is a process that
begins with due diligence and runs
through the ongoing management of
the new enterprise.

10. Predictable Stages of Acquisition
Closing the deal
Signing the agreement
Making the Announcement
Completing Financial Negotiation
Conducting due diligence
Formulating a letter of Intent
Convening preliminary discussions
Assessing compliance with Regulations
Agreeing on a first choice candidate
Narrowing the field
Selecting possible acquisitions
The realization that
integration is not a stage
following the deal came about
through experience.

11. Necessity mothers invention
Integrating: earlier is better
•Acquisition of D&K leasing, Kerr leasing and
Gelco
•Birth of a new framework for Integration
•Recognition of issues long before the deal is
closed
•Due diligence for an equipment leasing company
•Management culture of target company matters
•Employee’s morale of to-be-acquired company is
important

12. Recognizing that planning for
integration can begin with the
very first discussions gave GE
Capital a head start.

13. LESSON 2
Integration Management is a full-time
job and needs to be recognized as a
distinct business function, just like
operations, marketing, or finance.

14. Why Integration Manager?
Focus on
•Profit
Maximization
•Staffing Key Jobs
•Customer
Retention
Ignorance of
•Culture
•Process
•People
People in a newly acquired company need someone they can talk
freely.

15. Role of Integration Manager
•Manages the integration process, not the business.
•Facilitate and manage integration activities
•Help the acquired business understand GE Capital
•Help GE Capital understand the acquired business

16. •Who would make a good Integration Manager?
•How should the job actually work?
The high potential
individual
The experienced
hand

17. LESSON 3
Decisions about management structure, key
roles, reporting relationships, layoffs,
restructuring, and other career affecting aspects
of the integration should be made, announced,
and implemented as soon as possible after the
deal is signed – within days, if possible.
Creeping changes, uncertainty, and anxiety that
last for months are debilitating and immediately

18. Challenges
Restructuring,
Change in Policy
Issues of Security
and Identity
Negative Impact
on productivity,
customer service
and Innovation
Lack of Trust Risk of retaining
the staffs

19. Restructure with respect
•Never tell the acquired staff that it will
be business as usual when it never will
be again
•Treat properly those individuals who
will be negatively affected with dignity,
respect, and support.

20. LESSON 4
A Successful integration melds not only
the various technical aspects of the
businesses but also the different cultures.
The best way to do so is to get people
working together quickly to solve business
problems and accomplish results that
could not have been achieved before.

21. Four steps to bridge the cultural
gaps
•Meet, greet, and plan urgently
•Communicate, communicate, and then
communicate more
•Address the cultural issues head on
•To move from the few to the many, cascade the
integration process

22. CONCLUSION
•Competence is something never fully attained
•It is only a jumping-off point for an ever higher
standard
•In 1992, employed a ‘change acceleration’
methodology
•Since 1995, sponsored periodic conferences
Today, GE Capital is better at acquisition than it was
before and goal is to be even better in future.