A merger combines two independent companies into a single new entity. It differs from an acquisition, which involves one company absorbing another. Mergers can enhance market presence, streamline operations, reduce costs, and create synergies. There are five major types of mergers-horizontal, vertical, market-extension, product-extension, and conglomerate. Mergers can yield unique benefits, but they also can be complicated and pose challenges for businesses.
Employees
Mergers can lead to job loss, and the fear of losing their position is one of the most common concerns employees have about mergers. Other concerns include fear of changes in their role, culture conflicts, and uncertainty about the future of their company.
Organizations can help ease employees’ concerns by being transparent during the M&A process. Providing regular Q&A sessions and consultations with employees can allow them to voice their concerns and feel included in the process. Updating job architectures and ensuring that employees know how their roles will or won’t change post-M&A can further ease employee fears.
HR
Human resources (HR) is often a critical player in M&A. It is responsible for coordinating policies, aligning cultures, and managing redundancies. In addition, it is necessary to conduct legal due diligence — an investigation into the target company’s financial statements, contracts, compliance, intellectual property, and more — in order to make sure that a deal is fair for both parties. Legal teams can then draft detailed agreements based on the information gathered during this phase. Lastly, they may need to arrange financing and obtain regulatory approvals, depending on the size of the deal and jurisdiction.