Mergers and Acquisitions

Keys to Merger Success


Beating the Post-Acquisition Blues

There are key challenges that an executive leadership team must address during the six critical months following an acquisition. Action must be taken to cast the acquisition in the best possible light among analysts, employees, and shareholders. The environment changes yielding to uncertainty, stress, even outright resistance. Assets need to be integrated. And, decisions need to be made about whether to invest in or rationalise various aspects of the merged entity.Hand Shake - A Sign of Merger Success!! But what can you do to avoid the most common pitfalls that plague the vast majority of mergers and acquisitions today?

To begin with, it is important to understand a number of assumptions going into any corporate combination. An understanding of these simple assumptions can help you plan where you're going and minimise some of the most disruptive issues that can jeopardise the success of a deal.

First, executives need to keep in mind that, ultimately, there is no such thing as a merger. Acquisition is a more accurate term since inevitably one group will have more power than the other. By accepting this early, you can effectively set expectations and take measures that will ensure a smooth transition.

Second, there is often an unrealistic expectation that once done it can be undone. Executives need to recognise this will not happen for a number of reasons; not the least of which is the simple fact that regardless how hard you work to get back to where you started, numerous factors change in the process of going forward that make it impossible to go backwards.

Third, it is essential to remember is that most in the merged company will feel intense anger when they see some senior members leave having made large sums from the deal. The executives who remain are the ones who have to deal with this highly charged environment.

Fourth, in merger activity clarity, in every sphere, is king. Employees appreciate it, the markets respect it, and your shareholders expect it.


The State of Merger & Acquisition

While the pace and size of merger and acquisition deals continue to swell, an undeniable fact remains unchanged: the majority of mergers and acquisitions fail.

They fail to meet financial objectives. They fail to increase shareholder value. And in one-third of the cases, acquiring companies even fail to recoup the premium they pay above market value for another company, according to Andersen Consulting research.

More often than not, the culprit is poor execution. The ability to integrate two companies quickly and seamlessly has never been more important. The ability to capitalise on new market opportunities, secure more customers and profits, and attract investment community rewards hangs in the balance.

Companies lacking well-oiled integration capabilities risk losing customers, employees, profits and market capitalisation.

In contrast, some companies have developed the ability to successfully and repeatedly merge and consolidate their organisations -- their business operations and processes, products and services, workforces, delivery channels, technologies and cultures. In so doing, these companies continuously improve their market capitalisation and meet stakeholders' value expectations.


A Final Word

The incremental investment to build an acquisition engine can pay huge dividends. An effective acquisition engine can significantly accelerate the integration process, avoid costly missteps, and reduce employee and customer attrition. By better ensuing success, it expands management's strategic options for growth.

(Extracts From: Andersen Consulting - http://www.ac.com)


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