Helping Your Business Thrive

  1. Home
  2.  · 
  3. Business Litigation
  4.  · 4 factors that can impact a merger or acquisition’s success

4 factors that can impact a merger or acquisition’s success

On Behalf of | May 30, 2023 | Business Litigation

Mergers and acquisitions can be unpredictable and complicated. Their success could depend on finding the right match. However, that is not always the case. Certain mergers or acquisitions could seem like the perfect fit but still fail eventually.

Around 70% to 90% of these deals fail for varying reasons. One of the common issues they face is failing to integrate organizations with significant differences.

An agreement could settle specific aspects, including essential terms and conditions regarding business operations, intellectual property or liabilities. However, the most crucial elements of these companies might be more abstract but equally valuable. The following factors could affect integrations, impacting success:

  • Company values: Two companies might seem similar but have entirely different values. Integration might be challenging or impossible if their values are conflicting.
  • Transparency and communication: Being honest about expectations is vital to any situation that requires collaboration. It is also true with mergers or acquisitions. Involved parties need to be transparent when discussing how to execute and implement significant changes realistically.
  • Organizational culture: Each organization could already have an established culture that works for them. Organizational changes could disrupt this and leave employees in disarray.
  • HR strategies: Human resources is crucial in instilling the organization’s values and objectives among employees. Failing to keep up with company changes might lead to a disconnect between management and the rest of the organization.

A merger or acquisition could yield success for the company and its employees if done right.

Anticipate challenges and be vigilant

Doing due diligence may not be enough to prevent a merger or acquisition from failing. Involved parties might not even discuss these factors before signing the contract. Still, accurate information and sound legal advice could help determine potential issues and develop insight into how to address them as they arise. Integrating might be difficult, but it is worth it when business success and livelihoods are on the line.