an overview of mergers & acquisitionshorowitk/documents/mergersand... · 2019. 8. 26. ·...
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An Overview of Mergers & Acquisitions
Stuart Ferguson, PhDOrganization Change
Resources, LLC
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Successful Mergers and Acquisitions
OverviewBegin with the End in Mind Exit OptionsMergers & AcquisitionsBarriers to Successful M&AImproving M&A ResultsQuestions & Comments
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Exit Strategies
Keep it in the familyBuild and go publicLicense/FranchiseMergeSellLet die
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“Begin with the end in mind”
By defining your exit strategy when forming your business, you will be preparing your long-term future.
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Why M&A?
Gain technologies or abilitiesGain market shareEliminate a competitorExpand geographic marketVertically integrateDiversify revenue stream
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Merger vs. Acquisition Differences and Advantages
Merger – Melding of equals; shared decisions; stock swaps; name reflects original parties; use product/service synergies to compliment both businessesAcquisition: Hail to the victor; Stock of acquired company goes away; Name of acquired may or may not go away
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M&A Activity
Usually between 10,000 and 20,000 business mergers and acquisitions per year
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Recent M&A Examples
BOA buys Merrill LynchPfizer buys WyethFiat merges with ChryslerExelon makes a bid for NRG
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Barriers to M&A Success
Brain drain – loss of creative intellectOver-estimation of synergiesConsumer revoltCultural differences
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ORGANIZATION CULTURE
The underlying values, beliefs and principles that serve as the foundation for an organization’s management system, along with the set of management practices and behaviors that both exemplify and reinforce those basic principles.“The beliefs and behaviors that will enable you keep your job, stay out of trouble and get you a raise”
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M&A Implications of Dissimilar Cultures
Inability to achieve the envisioned synergiesLoss of the best and brightest peopleExtended payback period and higher cost of capitalLoss of image and goodwillIssues related to quality, time-to-market, competitivenessOften leads to divestiture
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Setting the Stage to Make Your Dreams Come True
Clearly know who you are and what you wantMake certain that you are careful inselecting a complimentary partnerAccurately measure and acknowledge theorganizational and cultural differencesKnow that it always takes longer and costs more than planned to integrate two businesses
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Questions?Comments?