Merger is the formal consolidation of two companies into one entity. This type of business deal is often conducted to increase market share, gain economies of scale and boost competitive advantages. A merger can be achieved through a variety of methods including acquisition, swap, and reorganization. Depending on the strategic goals of the deal, there are several types of mergers including horizontal, vertical, and mixed conglomerate.
Employee morale during and after a merger can be impacted by the uncertainty that comes with changing company structures. For example, employees from the acquired organization who are unsure of their roles in the new entity may experience anxiety and a decline in job satisfaction. Providing regular communication regarding the status of the merger and how it will affect each employee can help to alleviate this ambiguity. Additionally, allowing employees to voice their concerns and participate in the transition process by hosting open Q&A sessions can improve communication and build trust. It is also important to update job architectures as soon as possible so that employees understand how their roles will change or remain the same after the M&A.
In a purchase merger, the assets of the acquired firm are swapped for shares in the parent company, which is typically a publicly traded corporation. This type of transaction is a way to gain ownership of valuable intellectual property without the risk of bankruptcy. The acquiring company will need to determine the fair value of the assets and negotiate a favorable deal with shareholders to acquire them. The acquiring company can choose to offer cash or stock for the target’s shares, which can impact the merger terms and final valuation.