Aligning Technologies and Cultures to Maximize Value from Mergers and Acquisitions
Mergers and acquisitions have become a strategy for manufacturing companies and other industrial organizations to enlarge product portfolios, enter new markets and geographies, acquire new technologies, acquire customers, and build a stronger organization. However, successful mergers and acquisitions can be difficult to achieve. Studies show that over half of all acquisitions actually result in devaluation of the combined entities.
With a merger or acquisition, how the two businesses align people, processes, organizations, and technologies and how they integrate the technologies, can be as important as the financial aspects. The process can be very complex, with multiple dimensions influencing the outcome. However, by carefully integrating technologies, processes, and organizations – the new business has a better chance for success in the long term. Using team-oriented approaches that enable organizational and cultural buy-in for standardizing, integrating, and deploying best practices and technologies should lead to a more collaborative environment that motivates disparate organizations to work together towards similar goals. However, the best technologies for one organization may not be the best for another.
Reports from both financial analysts and the media indicate that the merged value of combined entities' merged value often declines or fails. Experts estimate that over 50 percent of these transactions are failures, which can represent a waste of time, effort, and money. Failure is defined as not reaching the expected synergies for market, product, technology, or revenue growth that was projected when the value of the transaction was established. Here, failure does not mean that the transaction was a total disaster, just that time and money was wasted. If the companies understood the reasons for failing to meet expectations better, they might not have pursued the transaction.
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