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The 2015 coalition and how to survive a merger

21/04/15

All organisations have their own unique cultures and working practices which can lead to a lack of direction when a merger takes place.

The bookies’ odds are stacked in favour of no one political party obtaining a majority in next month’s election and if they can’t work things out we may well find ourselves in a 1974-style double election scenario.

The business world is littered with examples of mergers that not only didn’t quite work out but were unmitigated disasters. The failure rate is somewhere between 70% and 90% according to Harvard Business Review. One prominent example is Newscorp and Myspace, and whether this was entirely due to the merger is debatable, with several factors contributing to Myspace’s downfall, but one of the founder’s
comments on the matter is something of an indictment. Differences in brand identity can also contribute to a failed merger, as was the case with luxury brand Daimler AG’s (aka Mercedes Benz) acquisition of mid-market auto brand Chrysler. Nine years after paying $36 billion for Chrysler, Daimler famously paid a private equity firm to take it off their hands.

However mergers between different organisations can be incredibly successful, and create corporations that go on to dominate their fields. The Big 4 accounting firms, who now audit 99% of the FTSE, are a perfect example of this. Similarly Disney and Pixar united to create a brand that has gone on to dominate its corner of the entertainment market. So despite reports of “election uncertainty” spooking markets left, right and centre a fresh innovative alliance could be about to take the helm at UK plc.

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