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Companies that do not pay attention to the key issues often find a merger or acquisition to be an expensive failure.

Merger of two companies is like, a male (Company A) and a female (Company B) of equal strengths getting married (Merged) to add value (Strengthening their position in Market place) in their life. Acquisition on the other hand can be more like a male dominating a female or a female dominating a male in the course of getting married, thereby adding value in their life journey. The question here is whether the Merger and Acquisition is going to add value to the organization or it’s going to be a failure in the longer run.

Happiness is one of the basic parameters used to measure a successful marriage life. Mind you, happiness here doesn’t only mean individual’s happiness but also includes the overall happiness of the family. Similarly, Merger and Acquisition success can also be measured on the growth of the company, which depends upon the employee and other stakeholders’ happiness.

In today’s competitive environment, due to globalization all seem to be in a hurry to become global size players within a short time. Presently, India has the second highest growth rate in M&A, with only Japan ahead of it in the first half of the FY 2005. In the IT sector, there were around 43 deals with respect to Mergers and Acquisitions. From the above details, we can find that companies are looking at Mergers and Acquisitions as a strategic tool to develop their businesses, and to compete with major players in the global market.

Mergers and Acquisitions can be considered as an inorganic method by which companies try entering into newer markets, or try consolidating their positions in existing markets, there by positioning themselves as more important players in their segments. This also provides them competitive advantage over other companies in different product segments, there by increasing their stockholders' wealth. All the above information related to Merger and Acquisition shows mostly the happiest moment of their journey, but not the true picture of their relationship.

Merger or Acquisition at times can be a failure due to various reasons, but a successful merger is possible if both the companies decide to continue their relationship even after their honeymoon. Even if any differences occur in their relationship, they should be tolerant and highly matured to overcome, especially the cultural aspects, management styles and their position.

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* Contributed by -
Ravi Kumar,
Currently pursuing MBA from BIM, Trichy,
Article published in KRIYA, July'06 Issue, the monthly magazine of the institute.