R&D is an extremely important source of value in many M&As. Often, the buyer and seller R&D organizations are working on duplicate projects or projects not germane to the buyer’s long-term strategy. The integration team must define future areas of R&D collaboration and set priorities for future R&D research (subject to senior management approval).
Barriers to R&D integration abound. Some projects require considerably more time (measured in years) to produce results than others. Another obstacle is that some personnel stand to lose in terms of titles, prestige, and power if they collaborate. Finally, the acquirer’s and the target’s R&D financial return expectations may differ. The acquirer may wish to give R&D a higher or lower priority in the combined operation of the two companies.
A starting point for integrating R&D is to have researchers from both companies share their work with each other and co-locate. Work teams also can follow a balanced scorecard approach for obtaining funding for their projects, scoring R&D projects according to their impact on key stakeholders, such as shareholders and customers. Those projects receiving the highest scores are fully funded.
