A merger
is a very common thing that occurs in the lifetime of a company; as it is a
process of expanding ones enterprise. In this process of expansion two
companies come together and both take some remnants of each enterprise and
create a third commercial entity. In other words, when two existing companies
unite together to form a new company, it is known as a merger.
Now,
there are various reasons why a company decides to merge with another one and
various kinds of the process. There are so to say principally five types of
mergers: Conglomerate, Horizontal, Vertical, Market Extension, and Product
Extension. In the first type there is nothing in common between the merged
companies, in the second one both companies belong to the same industry, in the
third the two companies make parts of one single finished good, the fourth one
is where both companies make the same product but in separate market and
finally the fifth one is where both put in products that go well together.
Before
carrying out any kind of financial proceeding it becomes absolutely necessary
to consult a professional in the field. For a simple fact that it involves your
finances and you need to be extra careful with that. Always look out for
someone who has several years of experience in the financial world like Dessa Bokides.
She has
over two decades of experience in finances of large corporations and leading
investment banks. Her most recent position was that of an Executive Vice
President and Financial Officer at ProLogis. Here she was in charge of all the
financial transactions of the company including the accounts, credit risks,
corporate strategy, etc.
Entering
a merger is a major step in the life of any organization; therefore a very careful
consideration needs to be taken prior to the process so that there are no
loopholes in the process. Experts say that it is important to at least keep in
mind these following things before carrying out the merging process.
1. Strategy
and Mission-
whether or not your enterprise and the one you are considering to merge with is
compatible or not is important to understand and analyze whether your missions
and strategy are similar to the other one or not.
2. Ability
to address a key service
– whether or not that company will be able to address a key service provision
or a functional gap for your company or not needs consideration.
3. Tangible
Benefits – will
your company be able to feel the benefits of the merger or not.
4. Values
– whether the
core values of the new company and yours can come into a consensus and be
protected even in the new entity.
5. Cultural
fit – whether
the organizations have similar cultures of work
6. Leadership
in the future –
the proposed leadership in the future should be free of conflicts
7. Critical
success factors - the
things such as trust, openness, positivity, support, commitment and mutual
benefit can be maintained or not.
Any
financial expert like Dessa Bokides will
conform to the above mentioned considerations and encourage the owner of the
business entity to consider these few things prior to attempting a merger.