Synergies in Acquisition
What would the corporate parent need to do to ensure the realization of the sorts of synergy described above?
In today’s world of business, the synergies can be beneficial for both the buyers and the sellers. Synergy can be defined as the merger and acquisition of two companies in order to create a greater effect as compared to the efforts of the individuals. The organizations have been looking for different options available to them in order to acquire some other organization that can be profitable for them in their business as well. In the cases discussed Primedia and Tata acquisitions, there is need to for the realization of acquisition and that can be done in different forms. For the synergy acquisition, we will be focusing on a model that contains four parts in order to be worked for synergy realization. There are basically four main parts of this model that are
- Combination Potential
- Organizational Integration
- Employee Resistance
- M&A Experience
It has been said by most of the analyst that the potential of the organization that are to be acquired should be done before the combination process of the organizations. It is the basic step in the synergy realization and merger and acquisition process. The targets of the organization to be acquired should be analyzed that can define the combination potential of the organization and their view about merger and acquisition activity.
The next step in the realization of synergies is the organizational potential that depends on the approaches that will be taken towards the integration and to what the integration will be taken. There is a need for the learning and constructive interaction between the organizations that are going to be combined.
It is seen that most of the employees are against the process of merger and acquisition and they are not welcoming to this process. There are certain reasons for their reaction towards merger and acquisition process. There are further three factors that can be used in order to know the employee resistance that are
- Cultural perspective
- Career perspective
This process is very important before the companies move into the merger and acquisition process. It is also mandatory for the parent company and in order of synergy realization that it comes to know the employee resistance that can show either this synergy will work in the future or not.
The literature about the merger and acquisition is very helpful before going into the combination of two companies. However it the company has also acquired an organization, then it should keep in mind the experiences that it has learned from the past. The experience gained in the past can be helpful as it will be utilized in the future. However, if the organization has no experience in this merger and acquisition then it should get help from the literature available related to M&A.
What might prevent the realization of these synergies?
There are certain issues that can be a hurdle in the way of the realization of synergies in case of Primedia and Tata. The reason is that while talking about Primedia and About.com, both of the companies are best in their domain, one is expert in its articles domain in different fields while the other one is good for its wide range of videos. However, the main issue will be which company will be compromising over the issues like the employee resistance and the organizational and combinational potential. It seems that here in this case synergy will be of two kinds, one will be the operational and the other one will be financial.
The other factor that can be a hurdle in the realization of synergy is the employee resistance from both of the companies. The reason here is that the employees of both the companies in both the cases are doing their well and for the well-known company. They will find it hard to set themselves in focus to compete with the other company that is being combined with theirs.