ISS began operating in Spain in 1999. Within three years, it acquired more than a dozen companies and boasted more than 6,000 employees. How do you create a major company through acquisitions, when statistics show that more than half of such operations fail?
A case study of ISS Spain, carried out by IESE Prof. Julia Prats and research assistant Remei Agulles of the Center for Family-Owned Business and Entrepreneurship (CEFIE), analyzes the strategies that brought success to this multinational services corporation.
Growing Through Acquisitions
Founded in Copenhagen in 1901, ISS began as a security company before branching out into cleaning services. From the 1960s onward, it began expanding beyond Scandinavia by acquiring companies or diversifying its services portfolio. In the 1980s, it consolidated its presence in Europe and Brazil, and launched operations in the United States.
In the late 1990s, Joaquim Borràs was hired to lead the Spanish expansion. Borràs, who still ran the company’s Spanish unit at the time this study was written, was given total freedom and support to launch the project, with just one condition: he had to grow through acquisitions.
This meant that ISS had to buy up existing firms in their entirety, paid for with funds supplied from headquarters. Companies showing any hint of corruption or negative margins were to be avoided.
The Spanish unit was established near Barcelona. Borràs started by buying cleaning companies. By 2003, ISS acquisitions focused on services other than cleaning, starting with pest control, then moving into maintenance, auxiliary services and eventually catering.
Having made 18 acquisitions and experienced organic growth of 7 percent, ISS turned its attention to the western part of Spain where it had the least presence. It set its sights on UNICA, a big catch, but acquiring it was going to be tricky.
The two companies studied how to transform UNICA’s structure into business units of ISS Spain. In return for integration, UNICA was offered a high degree of autonomy and major decision-making responsibilities. In this way, UNICA was able to embrace the move, as most interpreted it as a promotion.
UNICA’s director Javier Urbiola described the integration process as surprisingly stress-free, due in part to the painstaking efforts that went into the design of the combined operation. Even though he had planned on leaving the company when the process was over, Urbiola decided to stay, because of the “personal way” in which Borràs addressed things. “I think that is the key,” he said, “because organizations are made up of people, and we all appreciate humility, respect and personal attention.”
Mergers and acquisitions can be viewed as great opportunities for learning. Here are some lessons that ISS learned from its Spanish experience.