Why mergers fail in Maryland

According to a study conducted be a major accounting firm, more than four out of five mergers fail to improve shareholder returns. One reason why this so often happens is a lack of communication during the transition process. Many employees are going to be against the merger or are just going to become disengaged while at work. During the merger period, there is no such thing as communicating too much. Keeping lines of communication open can help win over employees who may not be on board with the change.

Employee disengagement is an issue that needs to dealt with at the outset. Failure to do so could result in employees who offer nothing to the company either in the present or in the future. Severing ties with these employees may make it easier to fully invest in those who do have something to offer in the long-term.

Another issue that companies need to be aware of is how each company fits with the other. Both companies need to have a shared vision and similar long-term goals to be successful as one larger organization. This means doing whatever it takes to establish a singular culture and working hard to maintain that culture. Companies that plan to merge are urged to understand that the creation of a singular vision is something that happens over time as opposed to all at once.

A merger may succeed if both companies are invested in the future of the new entity. Management needs to engage with employees and actively seek out ways to win them over. As change is difficult for some to adjust to, there may be disengaged employees that the company may need to move on from.

Source: Huffington Post, “83 Percent of Mergers Fail. Leverage a 100-Day Action Plan for Success Instead.”, George Bradt, Feb. 4, 2015

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