Enumerate the common mistakes made by the corporate leading to pitfalls in mergers and acquisition?
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2017
Enumerate the common mistakes made by the corporate leading to pitfalls in mergers and acquisition?
Answer & Explanation:
Corporate make following common mistakes leading to pitfalls in mergers and acquisitions: Ego problems on both sides – buyer and seller – crop up very frequently and resulting clashes make bad situations worse. Trying to have two chiefs is a formula for disaster. Attempt to hasten the integration between both the parties' raises the likelihood of making serious errors. Sudden and radical changes such as relocating the company's entire production operations should be carefully considered before implementation. Many buyers assert their ownership by moving quickly to convert the acquired company. This does not always work in the right direction and spirit. A cautious approach should be applied to competitor end runs. While the company is focussed on integration, it furnishes an ideal time for competitors to make a run on the market. Unless the acquired business is in the exact same field, different dynamics need to apply for smooth operation and integration. One of the most common and damaging mistake is to lay off crucial employees from the acquired company. This is a very complicated, delicate matter and even the seller might not have an accurate idea as job titles can be misleading from the functions that are entwined with them.
Topics: Mergers & Acquisitions
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