The Deadly Sins of Mergers and Acquisitions

post-img

Mergers and acquisitions are popular business growth financial constructions. In theory, they are a fantastic way to grow a business and their market reach. In reality, however, mergers and acquisitions are rarely successful. This is because people often dive in head first, instead of taking the time to learn more about company mergers and making an informed decision. Not just that, almost everyone who does that ends up engaging in the deadly sins of mergers and acquisitions (M&As) as well. So what are these deadly sins?

The Deadly Sins of M&As

  1. The assumption that every partner is equal. There really is no such thing as a ‘merger of equals’. There will always be deadlocks, and someone has to take charge. It simply isn’t possible to come to some sort of 50/50 understanding, unless someone is in charge, which by definition means that the two parties are not equal.

  2. Using a one-size-fits-all solution. On paper, M&As follow certain rules and steps. In reality, each company is unique, with a unique culture, and that means that each M&A has to be equally unique.

  3. Managing but not leading. For integration to be successful, it has to be completed within three months. After that, the individual participants are no longer motivated and excited, and opportunities will be missed.

  4. Thinking the primary strategic objective is saving money. M&As cost money and you have to be willing to spend it to achieve success.

  5. Believing benefits will be noticed within a year. Most M&As take a very long time to get right and you have to see this as a long term investment. If you’re hoping to see fantastic profits and results within a year, you’ve set the bar too high.

  6. Thinking that stabilization can only happen if there is no strategic void. When you enter into an M&A, there is always a void, an unknown. You have to trust that you have the right people on board to fill those voids as and when they present themselves.

  7. Declaring victory straight away. Some companies will declare success as soon as there is the smallest positive result. This leads to complacency and eventual failure.

  8. Forgetting M&As impact customers as well. Most professionals only look at staffing issues within M&As and forget that their customers are also watching them and feeling uncertain. Focusing on customer service should be a top priority.

It doesn’t matter whether the M&A was hostile or friendly, it will always be hard work. You have to consider the different elements of the organizations that have been impacted, the fact that staff is worried about their job, the reality that customers are considering going elsewhere, and more. You have to know that there are going to be serious obstacles and probably a few massive failures along the way. A successful merger or acquisition is one that faced those obstacles head on and didn’t throw in the towel at the first hurdle.

Leave a reply