Mergers and Acquisitions

Mergers and Acquisitions

Introduction

Mergers and Acquisitions, and the decrease in activity around this area, is a topic acutely relevant to management consultants and the overall business environment. The number of notifications to the Competition Authority was down thirty per cent in 2009 according to law firm McCann Fitzgerald (Maeve Dineen, Irish Independent, 2010). The facts also show that there was a decrease in the number of transactions in the second quarter of 2010, down to fifty-two to sixty-two, a drop of more than sixteen per cent (www.iicm.ie). A similar trend has continued in subsequent years. This movement is relevant to management consultants as organisations utilise management consultants to assist and advise before, during and after the process: “to draw on their unbiased analysis; to benchmark organisational processes against a range of best practices; to gain perspective and see the ‘big’ picture; and to provide training and related implementation support” (Buono, 2005, pp. 229). Many companies at the present time may be worried or reluctant to begin pursuing such a strategy. However, the use of and experienced and dedicated management consultant can be the difference between expanding their firm and stagnating. These demonstrate the importance of management consultants in the merger and acquisition process and why they are crucial elements for many organisations who elect to pursue such strategies.

One recent news story whose management may benefit from utilising management consultants is of Steve Laird, a Belfast-based IFA who is contemplating M&As (see full article: Appendix One). Mr. Laird cites negotiations as a possible stumbling block in finalising these M&As, including “last-minute changes or issues” (www.ftadvisor.com). This is where a management consulting firm would be able to offer advice and expertise, guiding Mr. Laird’s Carrington Wealth Management to the best approaches. These last-minute changes could be translated as resistance from the targeted companies. This can lead to various and widespread problems for an acquiring or merging firm, some of which will be discussed in this paper.

M&As occur when two or more independent companies combine their operations into one new entity (de Man and Duysters, 2005). The motivation behind targeting M&As is often the notion of synergy. Synergy here refers to the idea that combining two businesses increases the value of the companies involved (de Pamphillis, 2010). This area incorporates economies of scale, scope and learning. The way in which companies approach these three important factors is a key role of management consultants. Consultants have a readily-available supply of knowledge and experience on these elements which makes them a vital component in the success of an M&A process.

Mergers vs. Acquisitions

A