There are many benefits of a merger, of which New York businesses might be aware. Not only is it possible to offer more products and services, but an increase in plant production, as well as research and development, may be the result. When a merger or acquisition goes well, investors might see increased revenues. However, the results may be quite different when the post-integration of the companies does not go well.
Shareholder revenue might suffer when there is a merger mistake. Companies combine with the hope of taking advantage of their position due to less financial risk. Here are four examples of what happens when mergers and acquisitions do not go as expected.
Two successful railroads merged to form another one in 1968. Two years later, the new company filed for bankruptcy, making it the largest corporate bankruptcy at the time. The two companies that merged were bitter rivals. The merger resulted when management pushed to overcome some uncomfortable trends at the time, deciding it was the only way out. Desperation did not equal success.
Cereal and teas
With a giant cereal company’s success in the management of a popular drink, they thought they could manage a tea company that had some very popular beverages. They paid big dollars; however, they did not know how to manage the company well. They forgot the rule of running a company with a skill set that adds value and expertise.
Internet and mass media
Two companies, one an Internet success and the other a specialist in mass media, formed a megamerger in 2001. Unfortunately, it was the time that the dot-com bubble burst. Each company pursued its own channels before the merger. After it, they did the same. Their synergies did not enhance each other. By 2003, one of their names no longer represented the company.
A large communications company acquired a majority stake in another. However, they made the list of mergers and acquisitions mistakes as cultural differences arose; one company was more entrepreneurial and listened to customers, while the other did not listen to customers and had a high turnover of subscribers. This merger did not pay off.
There may be cultural clashes between two companies that merge. Successful companies that form a larger one may not always equal success for the new company.