Mergers and acquisitions often fail because the businesses involved do not think things through enough to produce a viable result. Reasons vary from case to case such as losing the focus on the desired objectives, or failing to devise a plan that includes suitable involvements and control, or the lack of a properly designed integration process, and sometimes all of the above.
A qualified mergers and acquisitions attorney can help solve many of the following problems before they become major problems in a lucrative business deal. The key is to look for the elements that may lead to failure and correct them as they appear.
Companies often underestimate the importance of required resources, especially the human resource. For the deal to be successful, you’ll need your best players in the integration team, however, that’s not an easy task and businesses fail in this because of the following issues involved:
Failures related to mergers and acquisitions can’t be solely blamed on the internal issues. Many times it happens because of the external factors as well, such as a change in the business environment or major changes in the economy like recession, or the financial sector collapsing, with mortgage companies being the worst hit. These factors aren’t fully controllable. However, taking the help of an expert during the process can help in minimizing the risk, as well as in cutting further losses.
Companies tend to start their integration process without having a proper and clear strategy for that in hand. By ‘clear strategy’ it means that you should be very clear about whether to forcefully integrate by setting aside the cultural differences, or to go the softer way and allow the local/regional businesses to run the respective units, but with clear targets and strategy on profit making.
Incompatibility issues are common when you’re planning to integrate the systems of the acquired business such as its dissimilar ERPs, different accounting practices, document control, email and other related systems. If not supported by strong key internal resources and planning from many disciplines in both companies, outside consultant’s help won’t serve much.
Apart from the above mentioned factors, there are some other factors that lead to failure of most of the mergers and acquisitions. They are:
Our attorneys at Keating & Lyden specialize in handling mergers and acquisitions cases.
For help Call us today at (303) 448-8801.