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Mergers and acquisitions not always successful, so plan wisely
Mergers and acquisitions are in the news a lot nowadays, as readers may have noticed. In fact, merger and acquisition activity has been quite significant this year, with global mergers having exceeded a value of $3 trillion through the end of November, according to a recent New York Times article citing data from Thomson Reuters. The assumption, to those who aren't experienced in the area, is that all these business deals are probably really helping companies out.
But as anybody who is familiar with the area of mergers and acquisitions can tell you, while it is true that mergers and acquisitions have the potential to deliver value to shareholders through a synergy of combined resources, reduced expenses and extra marketshare, they aren't always successful. So, although there is currently a lot of deal-making in the area of mergers and acquisitions, it isn't necessarily the case that these are all wise deals that will succeed.
Mergers and acquisitions can involve significant costs for companies, and it is important before entering into these deals to do the appropriate research and legwork to ensure there will be a reasonable benefit at to the companies involved. There are a variety of factors which determine the success or failure of a merger or acquisitions, of course. Among these are the similarities and differences in corporate culture and the way a merger or acquisition impacts revenue momentum.
Appropriately structuring a merger and putting in place adequate planning for the joining of two companies should not be underestimated. Companies considering the possibility of a merger or acquisition should see to it that they work with an experienced team of professionals, including attorneys experienced in the area of commercial law, to ensure that they do everything necessary to ensure the success of the business deal.
Sources: DealB%k, “The Mergers and Acquisitions Cycle: Buy. Divide. Conquer.,” Andrew Ross Sorkin, Dec .10, 2014.
Investopedia, “Mergers and Acquisitions,” Ben McClure, Accessed Dec. 12, 2014.
