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Common factors in failed mergers acquisitions

On Behalf of | Mar 30, 2016 | Mergers & Acquisitions

Under ideal circumstances, mergers & acquisitions have a lot to offer all involved, from introducing innovative new technologies to established businesses to providing New York entrepreneurs access to rewarding partnerships. However, a vast number of M&As ultimately fail, and the following issues typically factor no matter the good intentions of either company.

Business Insider lists a few of the common causes of failed M&As, including an inability to accurately gauge culture of the company being acquired. What might seem like a good fit at the outset may ultimately lead to all parties being dissatisfied with process, especially when the company at the helm of the deal conducts themselves in a less than humble manner. Due diligence is highly recommended to this end, as this will provide sufficient information on what’s to be expected in terms of interpersonal issues, which can help create a more successful situation down the line.

Existing customer-bases can also suffer during the M&A process. Even the slightest change in a company’s revenue will have a lasting negative impact on success, especially in the aftermath of an acquisition. To keep a revenue stream moving along nicely, customers must be assured that the things they know and love about a business will remain despite any changes in leadership and personnel. Neglecting those customers that made a business so desirable in the first place will serve to diminish an acquisition before it has any chance of thriving.

The National Law Review provides a few tips on how to ensure an M&A has the best possible chance of satisfying all involved parties. In some cases, undertaking several smaller acquisitions is preferred to one large transaction. In the event the process does indeed fail there is a less of a risk of major loss of financial standing than when acquiring a sizable commercial entity. Additionally, creating a sound strategy is also highly recommended. Proper planning will help a business identify the best possible targets for acquisition, which can save both time and money when it comes to pursuing those candidates that may not make for a great fit.




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