The Importance of a Shared Vision in a Business Merger

Business mergers, when done right, can be mutually beneficial for all involved parties. However, there are some serious challenges that companies must overcome when dealing with mergers and acquisitions. Without the proper planning and preparation, these obstacles can lead to financial loss, a lack of shareholder returns, and possibly even complete financial devastation.

As an experienced business law attorney, I understand the potential advantages and the potential pitfalls of a merger or acquisition. Whether you are interested in purchasing an existing business or you believe your business will fare better with a larger brand name behind it, there are some things you should consider before you take action.

The Need for a Unified Vision

When considering a possible merger, companies may find that certain elements are difficult, if not impossible, to measure. However, even when measurements are possible, and data and projections look great on paper, they may not translate into real or actual success. Failure to ensure both companies share a unified vision is often the cause of disastrous outcomes.

Take the acquisition of the Snapple brand by Quaker Oats as an example. Purchased for $1.7 billion in 1994, Snapple appealed to a specific niche market. That niche had been their vision and their focus. Unfortunately, Quaker tried to take the company mainstream and failed at creating any serious interest among consumers. Just a little more than two years after acquisition, Quaker gave up on the venture and sold Snapple for a mere $300 million, just over one-sixth of the purchase price.

On the other side of the spectrum is the Disney-Pixar merger from 2006. Each company had their own direction, their own talents, and their own objectives. However, there also existed a synergistic, almost magical kind of collaboration effort between the two major entertainment companies. In the years since the merger, the two studios have released hit movie after hit movie including several Toy Story sequels and one of the highest-grossing film franchises of all time, Frozen.

What made the difference between these two situations? Why did one fail and the other succeed? Much of it can be attributed to each company’s ability to clearly communicate their vision early on, but ensuring that those visions mesh well is another component of success. Performance of due diligence, respect for the acquired company’s culture, and intentional efforts to form positive relationships are also critical steps to success in a merger.

Contact Us to Discuss Your Vision

If you are thinking of purchasing or selling a company in a merger or acquisition, it is important to have all elements carefully reviewed by an experienced attorney. Backed by over 40 years of knowledge and experience, our skilled Naperville business lawyers can review documents, assist with due diligence, and explain the possible outcomes in your upcoming business transaction. Start by scheduling a confidential consultation. Call the Gierach Law Firm at 630-228-9413 today.

Sources:

Huffington Post

Variety