Case 1: AssetOne Bank
AssetOne Bank is one of Asiaâ€™s largest financial institutions, but it had difficulty entering the personal investment business, where several other companies dominate the market. To gain entry to this market, AssetOne decided to acquire TaurusBank, a much smaller financial institution that had aggressively developed investment funds (mutual funds) and online banking in the region.
Taurus was owned by the European conglomerate that wanted to exit the financial sector, so the company was quietly put up for sale. The opportunity to acquire Taurus seed like a perfect fit to AssetOneâ€™s executives, who saw the purchase as an opportunity to personal investment market. In particular, the acquisition would give AssetOne valuable talent in online banking and investment fund businesses.
Negotiations between AssetOne and TaurusBank occurred secretly, except for communication with government regulatory agencies, and took several months as AssetOneâ€™s executive team deliberated over the purchase. When AssetOne finally decided in favor of the acquisition, employees of both companies were notified only a few minutes before the merger was announced publicly. During the public statement, AssetOneâ€™s CEO boldly announced that TaurusBank would become a â€œseamless extension of AssetOneâ€. He explained that, like AssetOne, Taurus employees would learn the value of detailed analysis and cautious decision making.
The comments by AssetOneâ€™s CEO shocked many employees at Taurus, which was an aggressive and entrepreneurial competitor in online banking and personal investments. Taurus was well known for its edgy marketing, innovative products, and tendency to involve employees to generate creative ideas. The company didnâ€™t hesitate to hire people from other industries who would bring different ideas to the investment and online banking business. AssetOne, on the other hand, almost completely promoted its executive from within the ranks. Everyone on the senior executive team had started at AssetOne. The company also emphasized decision making at the top to maintain better control and consistency. Frustration was apparent within a few months after the merger. Several Taurus executives quit after repeated failure of AssetOneâ€™s executive team to decide quickly on critical online banking initiatives. For example, at the time of the acquisition, Taurus was in the process of forming affinity alliances with several companies. Yet, six months later, AssetOneâ€™s executive team still had not decided whether to proceed with these partnerships.
The biggest concerns occurred in the investment fund business, where 20 of TaurusBankâ€™s 60 fund managers were lured away by competitors within the first year. Some left for better opportunities. Six fund managers left with the Taurus executive in charge of the investment fund business, who joined and investment firm that specialized in investment funds. Several employees left Taurus after AssetOne executives insisted that all new investment fund must be approved by AssetOneâ€™s executive group. Previously, Taurus had given the investment fund division enough freedom to launch new products without approval of the entire executive team.
Two years later, AssetOneâ€™s CEO admitted that acquisition of TaurusBank did not provide the opportunities that the company had originally hoped for. AssetOne had more business in investment funds and online banking, but many of the more talented people in these are had left the firm. Overall, the merged company had not kept pace with other innovative financial institutions in the market.