How to Succeed in a Business Merger?

How to Succeed in a Business Merger?

When two or more companies merge, the assets are pooled for the sole purpose of achieving a takeover or the formation of a new structure. This corporate restructuring induces changes at almost all levels of the organization. What should be done to make each of these modifications successful?

Analyze the organization for better change management

The organization of a company is based on its employees. The interim manager appointed to ensure the success of corporate restructuring will thus have to immerse himself in each employee’s role and importance in each of the structures concerned. 

He must also try to understand the various processes put in place and identify the key workers. It is these people without whom the chains of action do not succeed and who are also motivated by the fusion program. Once these prerequisites have been met, creating a climate of trust between the two teams will be necessary. The game’s rules must be reworked, and new habits must be established for the new team.

Communicate on the merger-acquisition

Workers often fear that information will be withheld from them in a company merger process. For transition management to succeed, you must focus on communication. Disseminate as much information as possible. If you are part of the management committee, ensure that both teams are at the same level of intelligence. If the task has been entrusted to a consulting or management firm, check that this aspect is not neglected. Otherwise, you will have to face a loss of motivation from your employees. However, you may need help to update employees on certain details. However, they should feel supported throughout the pursuit of change management. Reassure them as best you can, and support them by letting them know they can rely on you if needed.

Choosing the right type of merger

There are four different types of fusion, and each of them has its own characteristics:

  1. Merger-absorption;
  2. Fusion creation;
  3. Merger by the contribution of shares;
  4. The merger by the partial contribution of assets.

The merger-absorption is the most common; the assets of the absorbed company become that of the absorbing company. The creation merger consists of setting up a completely new company. The merger through the contribution of securities is an exchange that promotes the takeover of the absorbing structure over the absorbed structure. Finally, with a merger by the partial contribution of assets, the contributions are remunerated by shares in the absorbing company. Payments are made by allocating securities and shares, even if they are startups. The choice of the type of merger must be made based on the analyzes that will be carried out by the financial director.

Harmonize information systems

Harmonizing the global information system of the new company will create fluidity in terms of procedures and IT tools. This aspect must also be considered before the actual signing of the agreement. At this level, the most efficient information system must migrate to the other. The management committee must discuss the choice of the system that will be considered. All the details must be explained so the company whose information system is not considered does not feel aggrieved. Another solution is setting aside the two information systems to adopt a new vocabulary. With the help of each company’s Director of Human Resources, a new database will be set up, and new specifications will be drafted. New tools will also have to intervene in the process.

Have guarantees as to the financial situation

Mergers and acquisitions consume enormous intellectual, moral, and, above all, financial resources. A synergy effect must be sought, and when it is achieved, the budget allocated to the said merger is profitable. In other words, you will not have to deal with turnover, demotivation, disorganization, or under-productivity. All things inevitably lead to failure of the procedure when they exist. Therefore, the administrative and financial directors will have to anticipate the effects of this corporate restructuring. The point will concern third parties for whom the merger date corresponds to the date the various mentions are revised. 

It will also relate to the situation of the creditors because, within the framework of an absorbing company, the debts are transferred to the absorbing company without forgetting that the continuity of contracts depends on their nature. As for the employees, the restructuring affects them only collectively.

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