When it comes to business, every now and then companies may decide to merge with other firms to increase profits, improve productivity, gain new customers or penetrate new markets. While beneficial in terms of reducing overall costs, mergers also have the extra benefit of reducing competition between two or more rival businesses, a move which has helped some businesses avoid closing down. It is no surprise that with mergers & acquisitions come changes to the entire framework of the now newly merged organization but with that also comes new challenges as well. The most typical issue that comes with newly merged organizations is having extra people working in the company.
With mergers, businesses now have the unfortunate task of determining who could stay in the new organization and who gets laid off. Merged businesses do this to avoid having duplicate workers performing the same tasks as well as saving money on salary expenses which could also mean pay cuts for the people that they do retain. It is for this reason that many workers get anxious over the future of their employment status once word gets out that their company might be merging especially considering that companies can merge with little to no warning leaving blind-siding many workers leaving them unsure of what to do next. This uncertainty coupled with other issues such as low employee morale and internal conflicts have led to many other workers to leave their current employers and work in different companies. Mergers can be a very stressful experience for some employees to go through which is why it is recommended that all current employees prepare contingencies that would allow them to adjust to any changes in their working environment.
Most merger and acquisition proceedings, however, don’t go well as planned and therefore fail. According to a Harvard business review, between 70%-90% of all mergers and acquisitions fail mainly due to lack of clear strategies and communication between stakeholders to deliver on expected results. Though not easy to go through with, there are a number of ways businesses can overcome these challenges a few include:
- Creating goals and measures for progress.
- Evaluating your organization’s financial capability.
- Have the best team and leaders directing them.
- Encourage engagement between different stakeholders.
The most important thing that business should keep in mind if they want to have a chance of implementing a successful merger is to encourage collaboration between all parties involved in the organization. Without cooperation, strategies don’t fall through the way you may intend them to and objectives can’t be met. Collaborative approaches can help businesses and corporations alike foster a new corporate culture that unites everyone in the new organization to help it meet its needs and set new objectives. When an organization is able to accomplish this this can help them establish a new identity which encourages engagement between all stakeholders to find ways to improve current processes or implement new ones. A shared vision can help them accomplish this and as such, each individual organization must be able to develop its key mission, strategy, values, and processes. There is no one solution for the problems that can come with mergers & acquisitions which is why consultation and open exchange is key to making sure processes run smoothly in organizations by facilitating process designs, encouraging constructive coaching methods implementing team based exercises to build a stronger network that allows the transition from a small business to a new merge entity happen fluently to which a merger & acquisition has been successfully achieved.