For the past half a decade more or less, mergers and acquisitions have been rightly considered the prevalent growth strategy used by organizations in the corporate world. Right on the verge of the 21st century, M&A transactions grew to numbers that nobody expected, breaking records with ease and completely shifting the business landscape by setting a precedent. However, no matter how popular and common they became, it is a known fact that the vast majority of mergers and acquisitions certainly fail. People will often jump on the bandwagon and blame the lack of effective communication and the clash of cultures for the failure of the merger while forgetting to identify other facts that truly marked the disaster from the moment it was poorly crafted.
Here in Suzzanne Uhland’s Blog, we take a look at mergers and acquisitions and board different topics about these complex and sometimes even emotional processes, so today we want to clear the air a little bit with some of the most common myths surrounding mergers and acquisitions and perhaps be able to answer some of your questions and clarify some of your doubts.
Thinking you already have what it takes to make a merger succeed
Companies often mistakenly believe that they already have the right strategy as well as the right leadership for the job and forego on making adjustments in those areas. These assumptions can come at a great price for the deal as it creates a myopic look at the transaction and robs you of the opportunity to enter the deal with the right attitude. There is absolutely nothing that can be taken for granted in a merger or acquisition and one must always be ready to adjust your seemingly flawless strategy to fulfill the needs of the company and truly rise to the occasion.
As long as cultures are similar, we will have a successful merger
Do not get us wrong; culture is extremely important as it can make the transition go smoothly and soften the shock that can come from a M&A, however, this is just a small piece of the pie and should not be considered the magic potion that will ensure the success of the merger. How many stories have we not see of matches apparently made in heaven with companies that while similar, simply could not work together. If there is anything that you can truly consider paramount on the success of a merger or acquisition above cultural compatibility, will be the right leadership skills to deal with all the changes and the whole situation in general.
Communication is the most important aspect of the transaction
Communication is not so much about amount or quality but instead about being delivered at the right time and to the right people in order to ensure success. Increased communication doesn’t necessarily mean we will see a reduction in internal conflict, as a matter of fact, the numbers show quite the opposite. The study also shows that firms that have the most experience with successful M&A are prone to using fewer means of formal communication before, during and after the process takes place.
The whole point of the transaction is to access new markets
This is a very common myth amongst those who seem to think they know about mergers and acquisitions. They believe that somehow both companies joining and/or one absorbing the other means that customers from both corporations will now join under one roof. That is simply not true. These transactions are meant to enhance the way business is being conducted and taking advantage of products and processes that are available from the new arrivals. It is important to think that the merger is supposed to advance the already existing goals of the company and not simply enhance their market-share.
If the synergy works, then everything will be ok
More than 60% of failures in mergers and acquisitions can be attributed to missed synergies. While this may seem like a reason to focus so much on this crucial aspect, it is something that most of the time is addressed the wrong way. In order to get synergies right, one has to focus on getting the business model to work correctly depending on the activity instead of simply understanding how it used to work in the prior conditions that ruled it. Business model driven approaches consider customers and the way they acquire your products and services instead of simply looking at faceless data.
The M&A is the goal and not the strategy
Mergers and acquisitions are not the ends; they are the means to accomplish goals. The purpose of the company should always be the most important factor considered when planning and implementing strategies having to do with expansion and redirecting the focus of the organization. These tactics should always be looked at as a tool instead of an accomplishment.
* Featured Image courtesy of Digital Buggu at Pexels.com