Why do mergers and acquisition fail?

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Why Do So Many Mergers Fail?
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Why Do So Many Mergers Fail?

• Companies merge for a variety of reasons
  expansion of market share, acquisition of new
  lines of distribution or technology, or reduction
  of operating costs.
• But majorly merging of corporate companies fail
  for some of the same reasons that marriages do
  a clash of personalities and priorities.
• Merging is never going to be a simple solution to
  a companys problems.

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Reasons For Mergers Acquisition Failures

• Synergies The interaction or cooperation of two
  or more organizations, substances, or other
  agents to produce a combined effect greater than
  the sum of their separate effects. It sounds good
  but the execution so often fails because it
  requires extra efforts from all employees in both
  companies or organizations.
• Back Office Savings Back Office savings are
  usually the most reliable source of upside in an
  MA. Failure in Merging can create chaos and
  huge customer frustrations as the service levels
  fell during the merging of functions.

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Reasons For Mergers Acquisition Failures

• Strategy and Growth Modes Different Businesses
  with Different Strategies and growth models.These
  are the fundamentals of a business usually unseen
  from the outside though usually detectable once
  on the inside. MAs often demand some alignment
  of strategies. This assumes that one or maybe
  both were flawed in the first place. The result
  is either a new one or the imposition of one
  party strategy on the other. This usually leads
  to some level of failure.Each business, market
  and customer franchise is unique in some way no
  matter how small that may be. This often gets
  overlooked though ignorance or arrogance.

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Reasons For Mergers Acquisition Failures

• Brand Management The brands are often ignored
  by the MA planners because they fail to fully
  understand what makes up brands and their equity.
  The same should not be true of the boards but
  nonetheless, how often have we seen Mergers and
  Acquisitions where very strong brands are swept
  aside by the name of the new owner. This can be
  disastrous and destroy value and indeed simply
  throw away existing and loyal customers. All
  brands should be respected and invested in where
  they have current and future value.

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Reasons For Mergers Acquisition Failures

• Customer focus This is so often forgotten in
  the MA frenzy. Boards do not stop and say what
  will the customer think of we shift distribution,
  adopt common pricing etc etc? The customer is the
  life blood of the business along with its cash.
  How can this be forgotten? Still MA s take place
  with the arrogance to ignore the customer.
• LEADERSHIP All too often leadership is tested
  beyond its abilities when it comes to handling a
  bigger commercial enterprise with integration
  challenges. This is one area that is more vital
  than most. For shareholders the true motivation
  of leadership is critical. This must be fully
  understood.

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