Mergers and acquisitions command tremendous attention within the news, but not all of these deals thrive. The reason some succeed while others flop is clear based on recent studies. There’s a unique dynamic that businesses in a merger or acquisition each have, but it’s the world’s most successful deals that give us an idea of the recipe for success. One thing, in particular, is very clear; the majority of these deals find difficulty and lackluster results.
The Same Market or Industry
Mergers and acquisitions that result in a successful company require at least two businesses with the same market or industry. One company might make shoes while the other makes the sole of shoes. Keeping these variances in mind enables joining businesses to improve the logistics of each other. Neither one, in the case of shared markets, has to leave their scope of expertise. This means that the same consumer and loyal spenders can continue to be targeted.
Compatible Culture
Company culture dictates how a business is managed, the processes it adopts, and who a typical employee would be. These are important facets for a business to establish, and once they do, the resulting culture becomes pivotal for success. Changing how management works and which values a company will have is risky. Doing so changes the success plan. More so, incompatible cultures might spend more time bickering than they do succeeding.
Preservation After the Company Change
Persistence is a prevalent trait shared among the most successful mergers and acquisitions. Failure is a likely outcome when one company in a deal is forced to change too much. A business specializing in “indestructible Tupperware” should continue to specialize in that niche. There’s a recipe for success that businesses that merge or are acquired have. Changing that recipe is like trying to start a business all over again. This often fails.
Successful deals don’t do the impossible, but instead, they’ve managed to remain true to themselves. Two become one, but each must also see their value as separate entities.