Managing Risks in Mergers & Acquisitions
Mergers and acquisitions involve heavy risks. In this article, the risks associated with mergers and acquisitions are mentioned. In their anxiety to close the deal or in their enthusiasm to grow big, companies strike deals of questionable merit. A dispassionate analysis of the potential benefits and pitfalls involved is important before going ahead with a merger or a strategic alliance. Board members have an important role to play here, especially the external directors. CEOs must be thoroughly grilled and asked to explain the benefits of the merger. Once the decision to go ahead with the merger is announced, the focus shifts to integration. This is a task which is underestimated by most companies. In the final analysis, it is the efficiency with which the integration process is managed that decides whether the projected synergies materialise. The difficulties in planning and executing acquisitions make them very risky. Managers should never forget these risks when they strike deals.