Mergers and acquisitions.

Author:Debner, Chris
Position:Consulting
 
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Mergers and acquisitions are once again on the rise after a couple of "sluggish" years with less activity in the market. An analysis.

The most frequently asked question surrounding M&As is whether a merged organisation can grow with immediate effect and actually work and deliver the expected business results? The answer to this question can be "yes". Mergers are not intrinsically bad (despite the views propagated by certain media of mergers being games played in ego-fried boardrooms by a few executives). However, whether they work or not hinges on two management teams planning successfully for the future, starling on the day of the deal.

Acquisition Aftermath

The typical acquisition aftermath is similar to a marriage, everything is fine in the beginning but after a while little things about each other can become irritating and, in a worse case scenario, a marriage counsellor is called upon to smooth things over.

The real issue about mergers and acquisitions is that organisations are made up of people. Hence, the key to avoiding "post-merger blues" is to consider the people strategy of the post merger organisation prior to making the deal. Most mergers occur for strategic reasons, i.e., the acquisition of new routes to market, technologies, intellectual capital, economies of scale and so on. But many mergers are not conducted strategically.

Through their experience and expertise, consultants can act as relationship counsellors prior to the marriage. The use of consultants in merger and acquisition situations is vital for success, as they are able to provide an independent and un-biased analysis of the situation.

Mergers often provoke emotions among employees that can manifest in change resistance and, in worse cases, hidden agendas of individual employees. Consultants are aware of these pitfalls and can provide, besides their objective assessment of the issues and problems, the suitable solutions and approaches. One of the best practice approaches involves the four distinct stages "plan", "execute", "integrate" and "evaluate". Within each stage, there are a number of activities.

Best Practice Approach

The first stage is "plan", this is the area in which companies traditionally focus most of their efforts when undertaking a merger or an acquisition. For instance preparing a business case for the deal, raising capital, carrying out due diligence and identifying major risks. Nowadays more organisations are seeking the help of consultants, not...

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