The scenario after merger/acquisition is unique at least for a limited period of time.I want to know about these post merger implications.
It has a significant implication on the industry's performance. This depends on pre-merger structure, although. The number of the players in the industry is now reduced with attendant effects on price, competition and efficiency.
Hi Sanjeev,
The post merger implications depend on the type of merger, the financial positions of the firms pre-merger & the method of payment of purchase consideration ( by issue of new shares, cash, etc..)
The first & most important issue is integration challenge - product, process, market, cultural integration.... Without successful integration, expected synergies do not materialize. But, apart from this obvious issue there are others - the acquirer's share price may increase or decrease depending on whether it is an accretive or dilutive merger. Depending on the target firm & the method of payment of consideration, the acquiring firm may end up with lesser cash & larger capital base. If it is a horizontal merger leading to reduced competition, eventually market share & profitability may increase due to economies of scale & reduced competition. Conglomerate mergers may lead to diversion from core competency, dilution of organisation’s vision, & the stagnant or declining revenues.
Hemlata
It has a significant implication on the firm's performance. Basically in post M&A, the share price for the acquire is expected to go up and the acquirer's go down .
Thanks Dear Professional Colleagues for sharing your valuable ideas on the topic.
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Sanjeev, your interesting question raises a range of people and non-people related issues in terms of the M&A implications. Some of these include, but are not restricted to, how to integrate two or sometimes even three sets of cultures from the merged, acquiring and acquired companies, how to harmonise the Human Resource Management practices, policies and procedures from the apparently different companies, how to mitigate against employee and management stress, anxiety over jobs and future careers, how to harmonise reporting mechanisms and hierarchies of control and authority and so on. Interesting stuff.
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