The impact of mergers and acquisitions on business many differ on the condition of the company and further plans. The main objective of merging is to reduce the expenses of the company. However, the process is not always successful for every firm. It depends on number of factors considered. According to the studies, M&A can affect senior executives, labor force and shareholders in many ways, which certainly may effect on profit and reputation of the firm.
Let us now check the impact of merging on various departments of the firm:
Impact of Merger on employees:
It is a well-known fact that, when there is a merger, employees are bound to be laid off during bringing down the cost or closure of certain departments. Company may require only good performing employees for the given task. These employees in turn have to look for another opportunity either in less package or similar package. Employees have to compromise in terms of work and pay once the merger takes place. Many employees see this as an opportunity to seek job at a new company and go for a higher package.
Impact on Top Management:
One of the major impacts on top management is the clash of ideas and egos. This happens because of the variations in the culture of two organizations. New management team might ask for change in policies or implementation of new policies. When such situation arises, the top management finds it hard to work as a team. Moreover, the main focus of bringing up the company gets aside, and executives become busy settling their own matters.
Impact on Shareholders:
Of Acquired Firm: Shareholders of the acquired firm benefit the most, because acquiring usually pays less excess. In this situation, shareholders forgo their shares and offer amount more than the actual price. For a local company, buying another company at a higher price can be a fruitful deal.
Of Acquiring Firm: Shareholders of acquired firms are most affected. Acquiring company looks for larger sum of loan to acquire other company, leading to the debt and loss for shareholders.
As mentioned above, the impact of M&A depends on the company’s condition and method of merging. Seeking advice from professionals like Generational Equity executives will certainly help you to gain more knowledge about the merger and overcoming the problem of aftermath. The advisory company will certainly help both companies to understand the method and how to successfully run even after the merger. The advisory company conducts seminars for different company to have fruitful communication on merging and how a firm can tackle with problems. It is highly essential for a company to plan and execute it properly without facing any loss of cost and trust. There are certain acquisition norms which needs to understood and followed by both the companies.