Can a merger ever be the right move for a company that is struggling?
When your company is struggling and you can see only trouble ahead, it can be difficult to know what to do. Introducing robust and clear business restructuring methods can be the obvious answer to try and turn things around, but many people see a merger as a more attractive, long-term plan.
But what are the benefits of joining forces with another company?
Sharing expertise
A company merger can allow knowledge and skills to be shared between two businesses, allowing them to learn from each other’s strengths and weaknesses. This is a key point as it could ensure that you don’t repeat the mistakes which got your company into trouble in the first place.
The ideas might be about cost-cutting measures that initially seem rather small but all such measures can eventually add up and you may find that 12 months on from the merger you have found a way to make savings across several areas of the company.
Keeping the costs down
Pooling resources and sharing office space should help a company to reduce their overheads and overhaul running costs. As the two businesses will be working in tandem after a merger, the costs of areas such as marketing can also be reduced, something that could be invaluable going forward.
Also from a marketing point of view, you may find that more people mean more ideas (hopefully great ideas that can point the company in a healthier direction).
Extending your market reach
If the two individual companies involved in the merger have different clients and operate in different markets, there is a potential advantage to this. Forming a single company may mean that they are able to penetrate a number of sectors and markets, potentially including overseas markets. You might be able to break new ground that you never would have previously considered.
By Phil Smith