Do Mergers and Acquisitions Add Value?
As a theory it is expected that the value of the two firms after merging should rise. But this is often not the case in real life. Why?
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Tuaneri Akoto, MBA, FCMI
CEO, United Kingdom
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Do Mergers and Acquisitions Add Value: The Human Element
As with most theories practice often differs from the theory that underpins or attempts to predict or describe reality. Merger theories generally talk about the benefits of a merger. However, the human element is often lacking in consideration.
Human interaction or lack of it is a major factor in why mergers do not work. A merger can take place with the expectation that value will be created from the combining of firms. However, the employees might not get along with each other, one firm might see the other as a threat to their employment in weeks or months to come, there might be a huge difference in workplace culture, there could be different management styles,
Human interaction is an imperative to be assessed as part of due diligence. This can be the most important factor in the success and added value in a merger/acquisition. If the workforce do not get on, if there is wide spread personality clashes, if there are differences of perspectives and how things should be done then value is not added.
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