The billions of dollars involved in mergers and acquisitions often give the public a sense of awe, although 80% of these deals fail. Understanding the reason for a business’s success and then trying to build from there is difficult because of the unique-selling-proposition (USP) theory.
The success of any product or service is based on years of development and the unique-business structure that follows. Partnering with a consulting firm is one excellent preventative step you can take.
Most mergers and acquisitions fail because the leaders behind them fail to see the true mechanisms of success that the businesses they seek rely on. Timing, vision and market conditions are factors that make the building of a successful merger or acquisition nearly impossible without stumbling into a few, common pitfalls.
Below are the core pitfalls that mergers and acquisitions encounter:
That You Can Understand the Roles and Cultures
The workings of good-business ideas stem from complex individuals who are often impossible to replicate without having lived their lives. You might have once worked with a team of people that inspired you to think, so consider the role that chance plays when you team with people whose ideas also mesh with yours. Being in line with the roles and culture of a business is necessary for a successful merger or acquisition, but being in line rarely happens.
That There’s Space Within a Large Organization
Some-small businesses and fresh, new startups go directly to large brands with the hopes of requesting a merger or acquisition. The work of adjusting a small brand into a large one often fails because there’s no room to work in—within the larger company. Big corporations, for example, are hyper-focused on their ventures that are successful and can reduce the impact of a startup’s innovation if that startup gets ignored.
That the Finances and Debt Haven’t Been Mishandled
The larger agency among two-merging businesses can find easy ways of hiding the real story behind their finances. The worst-case scenario, which does sometimes occur in mergers, is the blotting out of the real figures behind a business’ public debt. Likewise, a company’s revenue is only valid if it outweighs the money they spent in operational costs, which, though being core information, can easily be disfigured.
The core challenge in mergers and takeovers, which businesses must accept, is respecting the success that a prior business has had. The most-disastrous thing that mergers can do is negate what has already worked for a brand.
There’s no way to achieve mergers and acquisitions without avoiding the pitfalls that such deals encounter. Although they sound concerning, there are steps you can take to achieve success, such as by working with an experienced partner or consulting firm.