Corporations decide to marry for any number of reasons: Growth. Economies of scale. Access to new markets. The underlying expectation, of course, is always based on the belief that the merger will improve shareholder value.
Yet the corporate road is littered with mergers that never reach their goals. In fact, more than half of all mergers fail to meet expectations. Like a marriage, the toughest part isn’t signing the contract. It’s the insight and effort that go into making it work.
What's the most common element in these failed mergers? Paying too little attention to the complex tasks of blending and capitalizing on the systems and processes that make the acquisition strategically advantageous. Corporate cultures often clash. Incompatible managements can sap the firm of energy and focus. Productivity drops. Key employees lose morale and leave.
In a merger, you're not just buying assets. You’re also buying people and processes. Expertise. Hopefully, synergy. While the decision to merge may be based on finely tuned analysis, value will be created only when the two companies are synthesized effectively.