Recent posts on this blog have looked at the topic of mergers and acquisitions, specifically with regard to regulatory challenges that can arise for companies competing in the same market. As we’ve noted, businesses can benefit greatly from working with experienced legal counsel throughout the merger review process.
Even when companies can avoid or work through concerns about antitrust issues, though, a lot of careful planning needs to happen to ensure a merger’s success. Companies have to have a clear plan to combine their resources and align their objectives for a profitable purpose and they must ensure a fruitful synthesis of corporate cultures. Companies must also plan for the risks involved in a proposed merger.
One of the risks companies have to consider when considering and planning a merger is the need for continued innovation. Companies that enter into a merger expecting that the merger will automatically result in new or continued financial success risk failure, while companies that actively seek to combine the strengths of each company for the purpose of innovation have a better chance of success. Awareness of each company’s brand is another important issue. Consumers care about brand and the merger of two established companies can have a significant impact, for better or worse, on how consumers will view the results of the merger.
Strategic investment is another important consideration with mergers. Acquisition of a business is an investment, and it is important for businesses to invest wisely and do the due diligence necessary to help ensure the success of the investment. This is all the more important given that a large number of mergers and acquisitions do not result in returns for shareholders. With careful planning and skilled legal counsel to provide sound guidance, though, business can help ensure better chances of success.