Mergers and acquisitions (M & A) are not easy decisions and activities. Besides the negotiation and the signing of the deal, multiple non financial aspects are also taken under consideration. Hence, it is not only about buying and selling a company, or taking over another business, it also involves the interest and the good will of the company itself.
The Bigger Picture
For businesses or companies involved in the merger and acquisition, it is important to ensure that the deal is right. It is the end result or the bigger picture that has to be taken into account. Under a merger or an acquisition, a successful deal can leave a huge impact on everybody who is a part of either part of the deal. However, it also has to be kept in mind that about 50% to 80 % of merger deals go in vain.
The Popularity of Mergers and Acquisitions
Even though the rate of failure for mergers and acquisitions is high, it is a popular activity. Amongst the many reasons for the sustenance and growth of mergers for the past 20 years, is the trend that has been based in the advancements in technology, globalization and heavy business competition. Financial and strategic factors of a merger and acquisition are the elements that appeal to many.
The Other Face of Failure
Performance and the rate of success and failure of the merger and acquisition activity are based in their financial and strategic factors. Even with a successful deal, chances of the meeting failing after a merger are inevitable under certain circumstances. Several factors such as job loss, worry, and anxiety or employee resentment at the workplace can be a common factor for failure. It is believed that these human factors can cause a drop in the productivity of the merged business between 30 to 50 percent.
Attaining a Good Deal
Being aware of the market behavior and staying updated with it can be invaluable in evaluating and later managing a merger or an acquisition. With knowledge at hand the deal can be negotiated in a manner that is beneficial for all of the parties involved. One is required to adopt a wider and broader perspective to make improvements, continually, to the understanding of dynamics involved in making mergers and acquisitions a success.
It is indeed true that due to globalization, mergers and acquisitions have served as being one of the most popular means of economic and industrial growth and expansion. It is all about understanding the variables that make the process of merger and acquisition a success.
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