Mergers and acquisitions are usually tied to one of the following market scenarios:
* Industry Overcapacity: These combinations often occur in industries such as automotives, petrochemicals, department stores, and utilities.
* Industry Roll-up: In some industries, local or regional companies combine to create global powerhouses.
* Product or Market Consolidation or Extension: These occur when a company wants to extend its product line or market reach.
* Industry Transformation: Here expertise, competencies, and best practices are shared among companies to transform the way an industry works.
* Growth Bets: Many companies use acquisitions instead of research and development to build a market position quickly.
Even if all the details have been worked out and are based on a solid strategy, the success of M&A often comes down to the human factor.
This idea is particularly evident during all three phases of a combination:
1. Precombination Phase: When a deal is being negotiated by executives and approved by shareholders. During this time, decision makers should focus on specific synergies that they hope to achieve, not just the financials.
2. Combination Phase: When integration planning occurs and major decisions are made. It is important for executives to channel energies away from politics and self-preservation, and into combination planning. The emphasis should be on sharing knowledge to determine which processes to keep and which to change.
3. Postcombination Phase: When the actual implementation occurs. It is during this time that leaders should include all employees in organization and team building to combine cultures.
During each of these three phases, executives should focus their attention and resources in five key areas:
5. Transition management
One factor that is often present in difficult or unsuccessful combinations is the Merger Syndrome. Symptoms of the Merger Syndrome include stress reactions and the development of crisis management in the companies involved. It is important for leaders and employees to realize that the path will not always be straight forward; in all mergers there are steps forward, steps backward, difficult decisions, and trade-offs. Management will be faced with the task of running the business while simultaneously managing the details of the combination.
Design and Developed by WPoets