Why ABB Was So Successful in Its M&A Strategy: A Case Study

ABB (Asea Brown Boveri) is a global leader in electrification, automation, and digitalization, known for its highly successful mergers and acquisitions (M&A) strategy. Over the years, ABB has completed numerous high-profile acquisitions, integrating them effectively to drive growth, expand market reach, and enhance technological capabilities.

Key Reasons for ABB’s M&A Success

1. Strategic Alignment with Core Business

ABB’s acquisitions have always been closely tied to its core competencies in power, automation, and robotics. Instead of diversifying into unrelated fields, ABB focused on bolt-on acquisitions that strengthened its existing business lines.

Example: The acquisition of Baldor Electric (2010, $4.2B) expanded ABB’s industrial motor and drives business, reinforcing its position in North America.

2. Focus on Technology & Innovation

ABB has prioritized acquiring companies with cutting-edge technology to stay ahead in Industry 4.0 and digital transformation.

Example: The purchase of B&R (2017), a leader in industrial automation, helped ABB strengthen its factory automation portfolio.
Example: Acquiring GE Industrial Solutions (2018, $2.6B) enhanced ABB’s electrification capabilities.

3. Strong Post-Merger Integration (PMI) Strategy

ABB’s disciplined integration process ensures smooth transitions, avoiding common pitfalls like culture clashes or operational disruptions.

Centralized Integration Teams: ABB assigns dedicated teams to oversee mergers, ensuring alignment in IT, HR, and operations.
Example: After acquiring Thomas & Betts (2012, $3.9B), ABB successfully integrated its low-voltage products division without major disruptions.

4. Geographic & Market Expansion

ABB uses M&A to enter new markets and strengthen its presence in emerging economies.

Example: The acquisition of Chargedot (2021) boosted ABB’s electric vehicle (EV) charging infrastructure in China.
Example: Buying Epyon (2011) expanded ABB’s fast-charging solutions in Europe.

5. Divesting Non-Core Assets to Refocus

ABB has also been strategic in selling underperforming or non-core businesses to streamline operations.

Example: The sale of its Power Grids division to Hitachi (2020, $11B) allowed ABB to focus on high-growth automation and robotics.

Lessons from ABB’s M&A Strategy

Stay aligned with core business goals—don’t acquire just for growth; ensure strategic fit.
Please prioritize technology-driven acquisitions to maintain a leading edge in innovation.
Invest in post-merger integration—poor integration can destroy value.
Consider utilizing M&A for geographic expansion toenter new markets efficiently.
Be willing to divest—shed non-core assets to maintain agility.

Conclusion

ABB’s M&A success stems from strategic targeting, disciplined integration, and a focus on technology. By following these principles, ABB has maintained its leadership in industrial automation and electrification while adapting to market changes.