In business, a Merger is an event where two or more companies combine into a single entity to enhance their competitive advantage through synergies. The goal is to increase revenue and market presence by gaining a bigger share of the industry. Successful mergers play a major role in reshaping industries and enhancing sustainable growth.
Generally, M&A deals are funded with either cash or equity (stock) compensation. The choice of financing will have an impact on shareholders. If investors receive cash, they lose a part of their ownership in the new company; whereas with stock payments, investors gain an active role in the new entity and its growth, and thus may see a higher share price.
M&A has many implications for employees and should be handled with care. Employee engagement levels tend to be lower during M&A processes, and companies should make an effort to communicate clearly to employees on the rationale for the deal, what is changing, and how the change will affect them. This can include holding Q&A sessions and implementing regular consultations with employees. The company should also review job architectures and create positions that align with the new strategic direction of the organization.
Employees who demonstrate strong adaptability and performance can benefit from promotions in the new company. This is especially true if the resulting department structure offers career growth opportunities that their previous company did not. Additionally, the company should consider offering leadership training to help employees develop skills needed for a new management team.