Corporate culture and successful acquisitions

When company owners in Pennsylvania want to improve their market reach and profitability, a merger can be an excellent way to achieve their goals. In the first half of 2018, mergers and acquisitions rose significantly. The value of acquisition activity reached $2.5 trillion, an increase of 64 percent over one year earlier. Experts say that the availability of capital and affordability of debt have inspired more companies to grow through buying another business. However, despite the popularity of mergers, many corporate acquisitions struggle to make the transition successfully.

According to management consultants KPMG, only 33 percent of North American mergers and acquisitions add value to the combined company. The vast majority of these transactions reduce the value of the company or are neutral at best. Share prices often grow less than if both companies had remained independent. One of the biggest problems businesses can face throughout the integration process is the combining of disparate corporate cultures. Culture is more than just perks in the office. It represents the way that employees and management relate to one another and interact. When cultures clash in a merger, the resulting fallout can lead to an employee exodus.

While due diligence is a part of any solid acquisition transaction, it usually focuses on the legal and financial bona fides of the other party. However, cultural due diligence can also be important so that the other business can truly understand how the target company functions. This knowledge can be critical to positive integration.

Planning and strategy is critical to executing a successful business transaction. A business law attorney can work with a company to conduct proper due diligence and negotiate positive terms for the acquisition itself. In addition, a lawyer can help businesses deal with conflicts when they arise from reaching early resolutions to leading successful litigation.

No Comments

Leave a comment
Comment Information