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Omolabake Fasogbon…
While mergers can be a lifeline for struggling businesses from liquidating, they are more often a proactive business strategy to achieve scalability.
Moreso, that threats like financial instability, limited market reach, and increasing competition from dominating firms fuel sustainability concerns, fear of sustainability, merger readily comes to mind as a necessary bail-out.
Business merger defined as corporate strategy to combine with another entity and operate as a single legal entity holds significant potential for merging companies, employees and the customers.
Firms can leverage their expertise to boost financial performance, foster innovations, improve offerings and operational efficiency, unlock new opportunities and drive sustained success.
This move may also present new career opportunities for retained employees, improved services for customers, while shareholders also stand to gain from higher market valuation.
The Associate Director, Tax and Regulatory Services at Deloitte & Touche, Orhiunu Ibironke, averred that mergers will particularly be more instrumental to small and medium-sized businesses to overcome threat of competition from larger firms and common long-term sustainability barriers.
As rosy as business consolidation may appear, there is a high tendency that this effort may spell doom and yield just the opposite of expectations. There have been instances of merger discussions that never saw light in the country, notably Konga/Jumia and Oceanic bank deals, for fears of uncertainty.
Ibironke submitted that business mergers are not without their risks, recognising the need for companies to understand and strategically prepare for such barriers to navigate successfully.
“Experiences and findings have traced merger/acquisition failures to factors as misalignment of strategic objectives, overestimation of synergy, inadequate due diligence, external economic and market conditions and poor post-merger integration planning,” she pointed out.
According to her, merger transactions must be properly planned, with a clear post- merger integrations goals and proper evaluation of synergy to secure the success of transactions.
“Several mergers within Nigeria’s legal and financial industries demonstrate the benefits of strategic business consolidation.
“For instance, law firms like Advocaat Law Practice and AOA Legal Advisers successfully merged to enhance their market presence and service capabilities. Similarly, accounting firmslike Deloitte& Touch and Price Waterhouse and Coopers & Lybrand have leveraged mergers to expand their global footprint and strengthen financial stability,” she enlightened.
She identified some nuggets for successful business merger below:
Thorough Due Diligence
Conduct a detailed analysis of financial health, legal risks, operational efficiency, and market position to uncover potential risks and make informed decisions.
Clear Strategic Vision
Ensure that merger aligns with long-term business goals by identifying growth opportunities, cost synergies, and competitive advantages to drive strategic success.
Effective Integration Planning
Develop a clear roadmap with defined milestones, prioritise key operational areas, maintain open communication, and regularly monitor progress to minimise disruptions.
Good Governance Framework
Establish clear leadership roles, transparent decision-making, risk management strategies, and regulatory compliance to provide stability and accountability.
Cultural Compatibility
Assess cultural differences, foster collaboration, retain key talent, and align values to create a unified corporate culture that enhances employee morale and efficiency.
Learn from Successful Merger Deals
To increase chances of a successful business merger, it is essential to learn from companies that have successfully navigated the merger process. Study their strategies and best practices. By learning from others’ experiences, you can gain valuable insights, avoid common pitfalls, and develop a more effective merger strategy tailored to your business needs, ultimately preparing for success.
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