The T-Mobile-Sprint merger is generating a plethora of headlines. Some think it’s a bad idea. Others believe it will provide certain benefits. Still others don’t see a clear winner. Regardless of where you stand, it does raise a few interesting questions. We all understand what a merger is — the combining of two entities into one. But, there’s a lot more to it than just this simple explanation. The truth is, there are distinct advantages and disadvantages of merging two organizations.
Common Merger Disadvantages
Let’s begin with one of the most obvious pain points — employee morale. The reason two brands come together is to improve their performance. However, this often means the elimination of duplicate roles. And, rank-and-file employees instinctively know this fact. Another downside to merging is that it can create more debt. Teaming up means taking on the balance sheet obligations, which can easily become problematic.
…making changes to your business include the economic and political climate in which you operate. Determine whether tax or trade laws in your region are friendly toward the types of modifications you want to make. You may come to the conclusion that now is a good time to move forward with the desired alterations or you may elect to wait for circumstances to change in your favor. —Bix Fluent.com
Then, there’s another intangible — company cultures. One organization might operate with a completely different dynamic than the other. Which might manifest trouble when the two become one entity. Of course, merging means the essential elimination of the top decision maker. Instead, there are at least a few people on either side of the aisle.
Biggest Merger Advantages
Now, let’s take a look at the upsides of merging. The point of coming together is to improve the performance and ensure a better future for both companies. Here are the top merger advantages:
- Improved efficiency. We’ve already partially mentioned this but here’s the other side of eliminating redundant positions — increased efficiency. A merger can provide a new environment to improve efficiency on many levels.
- New territories. When two companies come together, it’s likely that one (or both) parties will benefit from the introduction of new territories. It’s a way to tap into market share without undergoing the growing pains.
- Cost-effective expansion. Speaking of growing pains, a merge creates an opportunity to expand without all the normal hassles. It allows for the identification of the best assets, which means increased productivity.
- Multiple growth opportunities. Two previously competing businesses combined as one opens up a number of growth opportunities. Instead of working to beat one another, they now work in unison toward one or more goals.
What other consideration would you factor into such a decision? What experiences have you had in this scenario? Please feel free to share your thoughts by leaving a comment!
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