Although merger sound promising for any business, there are many cases where the merger does not bring the benefit that was hoped for. It can be either in short terms or long terms. Most of the failure from merger is that this action does not improve the value or company’s shareholder.
But, despite the risk of failure, business mergers still a popular decision especially to expand the business market. This goal is supported with the latest world’s economic development, especially with the globalization, the development of information and digital technology, and the increase of business competition.
There are various reasons why business merger goes from hopeful to sour condition, or even worse bring down the company from the business market. Most common reason that can bring failure to a merger action is because the internal friction among the people inside the organization itself.
Until this day, there are no definite recipes to ensure the success of business mergers. A company will require deep and thorough research before deciding to merger with other company, to increase the chance of success from this business action.
The personal skill is also an important factor to improve the chance of success from business merger. A well trained management will able to implement the right attitude to the new organization structure and to form a solid team to perform business operation properly after the merger and acquisition process.
There are some basic steps to help increase the chance of success from merger and acquisition process such as;
Implementing the integration and synergy process before the merger contract is signed.
Top managers from each company could build a team to make arrangement to overcome the differences among the company such as business operation style, management culture, and company policy and make compromises that bring benefit for each parties and reduce the risk of dissatisfaction and revolt within the company.
The team should consist of individual from each party which possesses good management skill, cross-cultural sensitivity and good adaptation ability to bridge the differences from each party.
Because of the organization restructuring, top management should prepare for employee reduction and if possible make proper remuneration compensation for the employee that need to be laid off after the merger and acquisition process.
Top management is also need to build a response or problem solving team which consist the people from each party to provide quick solution from problems that might arise from the merger and acquisition process, making bonds and bring each party to cooperate with the process.
These steps are only help to increase the chance of success that can help to solve most problems that could appear. Other problems that cannot be solved with these steps might still happen.
It is quite easy to purchase other business company, but to unite that company to the main company and achieving success from the business merger is quite tricky.
There are many companies that are suffered from the unsuccessful merger process. The management needs to make sure that they do not make the same mistakes from the unsuccessful merger by other companies.
After the mergers and acquisitions process, the business scope will become wider. This can build new tension for the management. Because of the problems in adjusting to the new condition, any positive decision could become useless and meaningless.
The market share, profit and the company life are at stake if the management does not make proper action. So, in the end it is up to the chief executive to control and manage the new organization company.