Successfully developing companies sooner or later face the need to expand the market. The most popular ways to achieve ambitious goals are through mergers and acquisitions.
Practice shows that not all such transactions are successful; part of the market share is most often lost. In order to avoid losses and not end up with a broken trough, you need to carefully consider the merger plan and choose a transaction mechanism.
A merger is understood as the combination of two or more companies, as a result of which a completely new organization is formed, it is she who assumes all the assets and liabilities of its constituent parts. Merging can also be done by join type. At the same time, one of the companies remains, and the rest cease to exist, transferring all the rights and obligations to the surviving company.
Another way to unite is to take over organizations. At the same time, smaller companies become structural divisions of a larger one, ending their autonomous existence as taxpayers.
A merger is best suited for peer-to-peer companies with roughly the same market position. At the same time, a new company is formed with a new name and brand. The advantage of a merger may be the need to create a new organizational structure for all participants. It is very important to think about branding issues. It could be a co-branding strategy where the new name is a combination of brands from two companies, such as AOL-Time Warner or Daimler-Chrysler. Or a flexible branding strategy, where each company is known in its own geographic region. For example, in a merger between Renault and Nissan, the name Renault is used in Europe and Nissan in America, the change could be detrimental to the brand.
In a takeover or acquisition, the seller's brand is often completely lost. In order not to lose customers and market share, it is best to conduct acquisitions gradually. The main thing for the buyer in this case is to get the capacities and capabilities of the affiliated company. It completely loses its independence and cannot influence the main strategy of the merged enterprise. Most often, the structure, corporate culture, methods of motivating and rewarding employees of the absorbed organization change.
