Mergers
MergersWhat is your opinion of a merger? If you say and think a merger is a bad thing then you are not alone. Recently, �mergers were given a big thumbs down in a poll given to Americans and Canadians.� The definition of a merger is �a combination of two or more businesses to form a single firm.� The cons of mergers greatly outnumber the pros because as companies get larger and larger, people lose jobs, monopolies form, and consumers pay higher prices, resulting in a less competitive and, therefore, less opportune business market.
Is bigger really better? Big might be sometimes better, but companies, corporations and monopolies can get too big. �Some merged companies become so huge that they lose focus, gain overhead and increase their expenses dramatically. Ultimately they can be less innovative and competitive than before.� Big companies tend to care only for making money and devalue things such as the quality of the product they produce. �Smaller companies by contrast, can hold some clear advantages. They are leaner, more focused and nimble than giants and relatively speaking, the can be more profitable.� Smaller companies, I believe, are out to make a living and care for the consumer�s satisfaction more then just the money they will receive. They know that if they don�t produce well and make people happy then they will go out of business or bought out by a bigger company.
Mergers aren�t what I would call the most successful thing in the world either. Lots of mergers don�t last very long or don�t succeed. This past year we had quite a few merger failures. Here are the top 10 Biggest Merger and Acquisition Bloopers of 1999, announced by leading merger consultants.
1. AOL and Netscape
2. Excite
3. Disney and Infoseek
4. BNP and Bank Paribas
5. Tyco International Ltd. and Binge/Purge
6. Deutsche Telecom and Trouble on the Line
7. American Home Products and Warner Lambert
8. Aetna US Healthcare
9. AutoNation
10. Bank One
These companies all failed for many reasons. The Disney and Infoseek merger failed for the simple fact that the �managers of Infoseek could not get along with Disney.� As these managers quit, the company shares plummeted by 60%. Next we have the BNP and Bank Paribas merger. This merger failed because �BNP wanted to open equity markets in Europe, and Bank Paribas didn�t.� Half of the equity analysts have left the company and more senior-level management are expected to follow. In simple terms, the two companies didn�t get along well with each other. Then we have Tyco International Ltd. that merged with Binge/Purge. Such a shame that Tyco�s newest acquisition had �questions of fraud, people undermining decisions, and bad accounting practices.� My last example is that of AutoNation. AutoNation is a company recently formed that deals...
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