Mergers – Steps To Take To Avoid Disaster
Company mergers and acquisitions are an important part of any business life-cycle. Unfortunately, the decision to merge is often ill-judged, or the execution flawed, according to the HBR, who estimate that 70 to 90% of all mergers fail. Ensuring that this doesn’t happen requires time, dedication and effort; however, if a company can focus on a set of core merger principles, they’ll have a great shot at making it a success.
Brand succession – listen to the client
For modern business, brand is everything. Establishing how to address merger naming and whether the new company should decide to expand one brand, bring two together, or create a new brand altogether is important, and should be informed by the client base. An influential study published by the Journal of Product & Brand Management outlined just how important the market is when it comes to the success of new brands. In short, the market and its clients should influence brands when they come together. A new combined brand can be found from any of the potential sources following a merger – it just needs to be the right one.
The corporate structure
If brand is the external voice of a company, corporate structure is the internal monologue. As Forbes India rightly assert, corporate governance and structure can make or break a company – and it’s easy to see why. Something as simple as a strict culture clashing with a relaxed one can create productivity issues. Before finalizing the merger, it’s important to ensure that the people and structures involved are conducive to a good working environment.
Not pulling the trigger
The merger and acquisition process is a long one, but it is reversible. This can have short-term impacts on stock pricing, capital, and business, but is a better alternative than getting into a potentially damaging merger. This isn’t an unpopular view, and has trended in 2020 and 2021; S&P Market Intelligence note how many larger companies are looking to consolidate their current base rather than continue expand. The message is to not rush into any merger or acquisition that could have a negative impact on the company.
These principles lend themselves towards an analytical approach. Staying away from grand gestures and diving in blindly and taking time to assess every step of the acquisitions journey, is crucial. From the brand right through to corporate structure, taking this approach will yield benefits.