Philips’ new venture integration (NVI) department is aware of the fact that many acquisitions turn into “deals from hell” instead of “deals from heaven.” Its post-merger integration specialists have learned that cost synergies are far easier to realize than sales (or growth) synergies. Stimulated by the urge to grow, the NVI department has developed a new methodology called the “sales integration approach” to realize sales (or growth) synergies. It tries to implement this approach during the acquisition integration of Indal, a Spanish lighting company.The main challenge is presented by the shift in acquisition-integration capability following Philips’ evolved corporate strategy. While historically Philips had a substantive acquisition program, Philip’s new CEO has stressed the need for organic growth and set the stage for a series of medium and small acquisitions. Philips needs to become more customer-centric to increase corporate growth. This has required a focus not just on cost synergies (e.g., economies of scale and increased efficiency), but also on capturing sales (or growth) synergies. Philips-Indal must choose to defend regions in which it has a strong position or target regions where it has a weaker position. Furthermore, Philips’ post-merger integration leader must choose an organizational structure for Philips-Indal and convince Indal’s executive team to adopt the NVI department’s sales integration approach. This case can be used with Lighting Up Philips' Asian Entertainment Activities (B) 9B14M019.
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