5 Factors Influencing Mergers & Acquisitions

The corporate world is not a child’s play area. It revolves around strategies where time is of the essence. One such major strategy that many corporate leaders apply to increase their company’s overall face value is to adopt the tool of Mergers & Acquisitions. Through mergers and acquisitions, corporate leaders intend to expand the company, increase the market share, reduce costs, increase financial resources, earn goodwill, face competition, gain a competitive advantage, and achieve many other similar goals.

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Thus, the strategy of mergers & acquisitions is all about bypassing time and resources in order to achieve the ultimate organic growth that is required for the company. This article lists out 5 main factors that greatly influence the merger and acquisition decisions of a company.

Perfect Fit

It is all about the fit. There is no point in buying the entire toolset if you do not have the right spanner that can fix the required bolt. Similarly, mergers and acquisitions are all about achieving the right strategic fit. What will a banking company do by acquiring an e-commerce store that is into the sale of garments? However, when a banking company invests in an insurance company, benefits are numerous. Therefore, before considering mergers or acquisitions, the degree of alignment between the two industries must be analyzed in terms of usable resources, strategy, competitive situation, leadership and management styles, and the organizational culture.

Market Share

All companies that plan for mergers and acquisitions eye the combined market share. Corporate leaders are so protective in increasing their market share such that when such an opportunity presents itself, they will do anything to achieve it to gain a probable growth in terms of market share.

Accepting Change

Changes are difficult, especially when it comes to mergers and acquisitions. Mergers and acquisitions will be more difficult especially for that company which is going to be merged or acquired. There is a clash in many things, for example, the staff, the management, the resources, the policies, and others. However, different strategists deal with change differently. While some people avoid it, others confront it. Resistance is one of the most commonly encountered problems in almost all cases of mergers and acquisitions. Hence, tackling resistance to change is a major factor that will determine the success of the merger.

Lead, Not Manage

Resistances are bound to crop up after mergers and acquisitions. However, dealing with resistance in the proper manner is the key to a successful merger. One important way by which mergers can remain successful is for the leaders to lead the people and not try to manage them with a stick in their hand. Moreover, good training on new processes and policies will also help people mellow down faster to the change.

Evaluation, Feedback & Correction

The final step in every process including that in mergers and acquisition is to evaluate the results obtained from the results expected to see whether the objectives have been achieved or not. This is usually done by taking proper feedback and then planning for a course correction. Most corporate remain successful after a heavy merger and acquisition deal only because they take the effort to measure the results, evaluate their activities, and set proper expectations in terms of the expected performance.