Acquisitions won’t work unless attention is paid to issues other than just the business process of one organisation acquiring another.

Choosing the acquiring organisation is merely the start of what can become a challenging second part of the overall process. Behaviour, soft issues, attitudes to risk and the role of regulators can determine whether an acquisition is likely to be a success.

Determining the attitude of the acquiring organisation to risk is probably the single biggest determinant to whether the acquisition process will be completed successfully or not. It’s somewhat too late after choosing the acquirer to find out whether they are culturally risk averse or, more positively, willing to adopt a risk sharing approach.

‘Attitudes to risk and money are of course intertwined’

If it’s the former then undoubtedly they will endeavour to secure full external funding to cover all potential future risks, seemingly wanting to manage the future as much as possible; rather than seeking a risk sharing approach with commissioners to cover the financial consequences of, for example, the transformational changes on which acquisitions are often predicated.

Attitudes to risk and money are of course intertwined. NHS trusts being acquired by foundation trusts with a financial risk rating of four or five that are not prepared to financially invest their own resources, fully expecting complete financial support to be met by third parties, is arguably a poor use of the public purse.

Assessing attitudes

The counter argument from foundation trusts is, not unreasonably, the impact of acquisition on their regulatory assessment and the need to maintain their high ratings for public assurance.

This begs questions about the attitude of regulators to acquisitions and, in short, more regulatory flexibility is required.

‘Regulators can be used by acquiring organisations as a smokescreen to increase pressure in the negotiations of an acquisition’

In practical terms, something along the lines of a one-year moratorium on regulatory assessment would be appropriate. This would provide a window for the acquiring organisation to implement its integration plan and – given the performance ups and downs that often follow a merger – ensure service delivery is established on a sustainable basis across the new organisation.

Finally, regulators can be used by acquiring organisations as a smokescreen to increase pressure during the financial negotiations of an acquisition. Phrases such as ‘this would not be acceptable to the regulators’ would not be unusual in these circumstances.

Again, in common with assessing attitude to risk, such an approach should be a warning about whether honesty, trust and a commitment to make the acquisition work can be sufficiently developed by all parties.

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