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Mergers are like marriages and even the most successful of these arrangements are not always made in heaven. Once the ink is dry and the bankers and lawyers have collected their fees and happily moved on to the next deal, there are often many minimized or unforeseen issues to resolve. I am not disparaging either group, however I'd like to see a few more of these great deals actually capture the value initially sought from the deal. As in marriage, eventually the euphoria wears off and reality sets in. As the rosy dawn of the honeymoon evolves into the glaring light of day, two entities size each other up, compare cultures and circle their wagons as executives and employees in each camp protect their hallowed turfs, scurry to prove their individual and collective indispensability or sweat it out in hopeful obscurity if they feel the "red beam." The wedding dance becomes a herky- jerky dance that closely resembles that arhythmic embarrassment Elaine Benes called dancing on Seinfeld. It never quite finds a beat. . This is just what's happening on the surface. This leaves little time or energy for romancing the value.
What exactly is the value being sought? Well, profits, of course, and these can show up in many different forms.
Firms may seek access to newer markets or technologies!
They may increase market share or expand geographically. Firms acquire intellectual property and specialized knowledge and economies of scale, however none of this occurs without a cost. Firms must have the ability to share resources including capabilities more efficiently, and do so in a way that the costs do not exceed the value. This is a challenge to firms and often the greatest risk in mergers and acquisitions. The quest for profits is exacerbated by firm strategic life cycles. Most firms have already re-engineered, downsized, flattened and reduced costs- all cost cutting activities designed to create profits. This approach leaves fewer options for value mining. The logical strategy is to shift to increasing revenue growth and in doing so hope that the profits will follow. However, in this decade, while corporations sing the praise of entrepreneurship, and agile and innovative start ups, they more often retreat from the fierce competition engendered by these entities and shore up their resources through mergers. Again, that's where we come in.
Business Performance. Post Merger Integration.
Why Post Mergers?