When the merger of Britvic and A.G. Barr was announced late last year it looked set to create one of the biggest drinks companies in Europe. However the deal seems to have run into some difficulties and has been referred to the anti-trust watchdog due to concerns over competition laws.
In the meantime Britvic has revealed the merger of their own British and Irish arms, which will result in a major reshuffling, loss of jobs and a projected saving of £30 million by 2016. Such a move has cast some doubt on the merger between Britvic and Barr. Great news for both parties, as their merger has provisionally cleared about a week ago. One thing’s for sure mergers and acquisitions are a tricky business.
There have been numerous studies on the field of mergers and acquisitions and the failure rate has been shown to be between 50 and a whopping 90 per cent!
Here are some points to keep in mind if you’re thinking of merging or acquiring another company.
1. Maintain Neutrality. If you’re thinking of a merger or acquisition then odds are you’re excited about the potential opportunities for growth. You’re passionate about your business and the thought of becoming an even bigger player in your market is bound to stoke the fires. Don’t let it go to your head, or of those around you. If you don’t maintain enough distance you might blunder into a deal that is all wrong for you as you chase down the fantasy you’ve constructed in your head.
2. Assess The Benefits and Risks. OK, so your company is in good shape. So is your target company. Common sense dictates that if you add the two together then it’s double plus good for everyone, right? Wrong. The company that emerges after the merger or acquisition will be different to the two that existed before. It’s important to do a full analysis of both companies and then analyse what the new company might look like and what threats there could be to it.
3. Watch For Warnings. During the various stages of the deal there might be little snags and hiccups. These are normal and all part of the process. However, keep a careful eye on anything untoward. If you are uncertain on any point relating to the business, from profit and loss to staff retention, then ask questions and get answers that satisfy you. Don’t ignore worries.
4. Be Empathetic. This might seem like an odd point given the nature of what is going on during mergers and acquisitions, but it’s important to see things from the other side. Take it as given that nobody is going to get everything they want, but remember the best solution to any problem is a win-win. It might not be possible but strive for it at least. Don’t go into it looking to pummel the other guys into submission. Compromise will be involved but that’s the nature of the beast.
5. Keep Culture In Mind. One of the biggest reasons reported for difficult or failed mergers and acquisitions is a disconnect between the corporate cultures of the two companies. Culture is often ignored but perceived changes in familiar ways of doing things can cause issues for staff, and have a knock on effect after the deal is done. Acknowledge that a clash might happen and take steps to minimise it.
The reasons for the high number of failures are myriad, and hiring a firm that offers dedicated mergers and acquisitions services will substantially increase your chances of success.
For specialist advice from a team that provide merger and acquisition advice to quoted companies, private shareholders, management teams and private equity houses, visit http://www.bakertilly.co.uk/services/finance/mergers-and-acquisitions-and-private-equity.aspx