Merger and acquisition

The initial idea will come from the board of directors

it is a very long-term strategic decision and operational managers are unlikely to put forward the idea of joining together with a company who they see as a competitor in their day-to-day work.

The next step is to analyze the potential target.

This means not only understanding its products and its customers, but also its cost structure,

because the aim is to make substantial savings when the two companies join together

any future investments that might be necessary if it were bought.

Eventually you arrive at two figures

the first is what the company is worth to the current owners

the second is what it is worth to the company making the acquisition.

The first problem is cultural

the two organizations may have a different way of doing things, and there may be personality clashes between the two groups of managers.

The second – is poor implementation reorganization, new job descriptions, unfamiliarity with the customers and markets of the other company

it all will all lead to a period of confusion, and any expected cost savings may not materialize.

A merger is when two companies join together as equals to form one, and the process is mutually consensual

an acquisition (or takeover) is when a larger company buys a smaller one, and the smaller company may not be hаppy because its identity will be lost.