Mergers and acquisitions

Holding handsAn acquisition is when one company buys or takes over another and a merger is when two companies agree to combine.  Some people - including me - don't believe in mergers: whenever two companies combine, one is always taking the other one over, in effect.  Companies combine to cut costs, get access to really good people or products, or to reduce competition by 'eating' a competitor (this can be illegal).  If you are a new or low-level employee, you've got two things to worry about:

Losing your job - I don't think there has ever been an acquisition without layoffs, because there are always redundancies when companies combine.  The people at most risk are in accounting, or HR, or other infrastructure departments.  This is logical, since you don't need twice as many accountants if you double the business.  Many times the whole rationale for the combination is to reduce costs by taking advantage of economies of scale.  If you are in product development and the point of the combination is to promote your product, not kill it, you should be in pretty good shape.  But it's a good idea to look at the merger or acquisition from the point of view of the other company and try to decide what's in it for them.  You may need to polish off your resume and start looking for another job.

Losing your mind - OK, that's a cheap joke, but it's true.  Combinations can be well thought out and executed, or they can be mindless wastes of time, energy and money.  When it is an acquisition, at least one of the companies is calling the shots, and decisions - however bad - can get made quickly and with authority.  With a merger, an intense political battle for control is likely to ensue.  The execs from each of the companies are going to challenge each other for the right to remain in the new organization, and sometimes it isn't pretty. Indecisive mergers, where it isn't clear what the new organization is going to look like, can be uncertain and unpleasant places to work, with decisions about the most mundane stuff taking forever to make because the lines of authority are blurred. 

Another problem, which is well-recognized but still frequently not addressed, is the merging of corporate cultures.  I spent a lot of time talking about cultures previously and how difficult they are to change.  What happens when a small, free-wheeling company gets acquired by a large, staid, structured company?  I think you can guess.  I was at a 30-person startup with fun people, innovative technology and a young culture that got acquired by Price Waterhouse (as they were known then).  We got a great benefits package all of a sudden, to be sure, and immediate brand recognition, but they came with forms and procedures and documentation out the wazoo.  PW sent us one of their partners to try and 'civilize' us.  We didn't understand the partnership culture and we resisted the cultural changes that we had to make.  It was the first time anyone told me I was wearing the wrong kind of shoes (true story!).  Ultimately, they had to win because we weren't going to change the culture of huge, 100-year old accounting firm, but the transition was hard for many of us.
I mention this because if you are involved in a combination of companies, try to be especially alert to the cultural and social issues.  And try and keep your sanity.
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