Sentiments Make Effective Contributions to the Success and Failure of M&A Deals

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A recent survey indicates that one of the biggest factors that can cause a merger and acquisition deal to fail is the lack of emotional buy-in, which leads to improper integration and adaption of the companies’ operations and cultures. The year 2013 has seen many huge deals being made by some of the biggest names in different industries. Whether it is the IT sector or the telecom industry, stories of mergers have been heard throughout the year.

Recently a survey was conducted that had a sample size of 100 people. All these were senior executives at different organizations and were interviewed via telephone calls. Of these, almost 60% stated that most of the mergers are unsuccessful because of incorrect or improper integration. 50% people said that improper integration affected the share price negatively while 58% of the respondents said that it decreased synergies.

A managing director of a reputed company stated that a man’s belief and attitudes have a direct and drastic affect on his behaviors and actions. As such, it is not all surprising to see the significant impact that the human element and perspective can have on the merger. Whether this is for good or bad depends on the sentiments involved.

A massive 93% of the survey’s respondents believed that the key to a merger’s success are the emotions of an employee. Make them take pride in the new organization, and the transition and integration process become a lot simpler.

A vice president at another prestigious firm stated that a merger should be approached such that you clearly realize that two different halves will now be combined to complete the whole picture. People will have to communicate, collaborate and contribute and this is only when a seamless integration takes place,

If cultural integration and adoptions are not managed properly, businesses can loose significant amounts of dollars. As an example, an agency that has about a 1,000 employees will have to pay around $2.1 million in costs that arise because of unwanted turnover of employees. If workforce exceeds 5,000, the costs can even exceed $ 7 million.

The good thing is that all new companies realize that emotions play a significant role in merger and acquisition deals. As such, they take steps to deal with it while they march towards the merger.


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