There are many reasons to undertake a merger or an acquisition of a company. Often this is the quickest way to expand and gain market share. It is possible to manage the merger of two companies so that many overlapping parts are combined and costs are reduced. The strategies of mergers and acquisitions have many benefits and pitfalls, and understanding mergers and acquisitions will improve your understanding of how organizations generally work.
One of the most difficult and important tasks in a merger and acquisition is combining the cultures of different organizations. Any large organization has developed its own way of doing things over time and its own set of cultural expectations. How well the workers from two companies can work with each other depends to a large extent on how their cultures interact. Effective strategies make this a priority.
Layoffs can be a major pitfall of a merger or acquisition. Part of the reason for any merger or acquisition is to be able to combine the different positions and departments of separate companies to cut costs. This often involves a number of layoffs. These sorts of decisions can be difficult and can possibly cause bitterness. As a general strategy, businesses should attempt to be transparent and demonstrate impartiality with layoffs.
It is important to make communication a priority both before and after a merger. The organizations involved in a merger must be made fully aware of the strengths and weaknesses intrinsic to each organization to make accurate evaluations. For any planning involved in a merger and acquisition to succeed, there must be accurate information available to all parties. For trust to develop, there must be honest sharing.
Any business undergoing a merger or acquisition requires strong leadership to provide clarity amid so much organizational confusion. A good leader must provide a clear vision that the newly merged organizations can rally behind. She must be able to effectively communicate with members from both organizations involved and instill trust in both. The leader must perform a balancing act by making moves that appeal to both organizational cultures.