Mergers: What could go wrong? | Boston Financial Advisory Group
MERGERS: WHAT COULD GO WRONG?
Mergers are basically an amalgamation of ownership of firms or other business organizations and their units with other entities. The word merger here can be taken in its literal sense to show the merging of two or more firms to form a single identity! But as fancy as it sounds, it is equally complicated as there are various aspects of a merger that have to be considered while making this transfer.
Today let us have a look at the aspects where things can get especially tricky:
- The Big Fish:
Let us assume that you are merging your new startup with a company giant as you feel that more resources will flow in with an improved budget and financial support. This is exactly where you should be extra careful. The big firms definitely act as a launchpad for you, but it is also likely that your new firm may get bogged down due to various levels of bureaucracy and decision-makers!
Big firms move at a slower pace than the brisk speed of startups. Normally these firms have much bigger and more important aims to look after, so it is very likely for them to lose focus on your merged firm unless you have a well-worded agreement to secure their continued support
- Employee retention:
Many mergers face this basic issue of employee retention. The reasons are varied; employees feel it as a threat, they have a negative attitude towards the merger, they are uncomfortable working under the changed leadership, etc. It is very necessary to keep a low turnover during such a delicate transition because continuity is the key to reap the benefits of a merger!
You should see to it that you retain your key executives for the long run
Mergers are contracts that function on certain agreed terms and conditions. If you over-promise than what you can deliver, or fail to achieve certain goals on decided times, you have yourself a failed merger proposition
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