Strategic Issues Relating to Corporate Mergers and Acquisitions for Small and Medium Companies-A Thoughtful Analysis from the Viewpoint of Challenges of Changes

The challenges in the new millennium appears to be threatening to many small and medium scale businesses due to accelerated competition and abrupt changes in the business compositions. From the late of the last century to this new millennium technological changes have made a legendary revolution that influenced and reshaped the entire global business. Changes are very abrupt, unpredictable and surprising in nature as the large companies have been moving with very stronger strategic plans. Product life cycles have become sizably shorter than before just to beat the competition. As a result small and medium scale companies seem to be in a very intricate situation as they lack adequate resources to back up the continuous need for research and innovation. At this point, making synergy by way of appropriate mergers and acquisitions might produce sustainable results for them. Although terms 'mergers and acquisitions' are used sometimes as synonymy for each other, however they have slight variation in interpretations. Shapiro and Babirer (2000) stated, acquisition means ”the purchase of one firm by another” and ”merger means an agreement between the boards of directors of two companies to combine”. While there may be agreements between more than two companies to turn into one, may be called a 'mega-merger. It can be logically argued that grouping among thecompanies through mergers or acquisition can provide them with stronger economic and strategic power to move in line with the fierce competition. However, since most of the companies run on traditional business norms and practices and they may not have the appropriate knowledge and experience as on what basis they approach one another to combine businesses. Further, enormous qualitative and quantitative issues are involved to take a really gratifying decision to ensure a proper understanding, unity and solidarity. Evidences are there where two companies ran dialogues over the months to unite themselves but failed finally on a very silly point that caused disagreement. This may have resulted the abuse of time, efforts and energy on the part of both having finally a purely disappointing outcome. Financial expertise seems to be an insignificant issue as compared with other elements that are needed to consider for making a successful drive in the mergers and acquisition process. Most important element to first take a merger or acquisition decision is to get to know each other by way of knowing behavioral and corporate characteristics of the companies and of course the long term business reputation and affiliation with the customers. Characteristics of companies are highly heterogeneous and the example of two truly identical firms in terms of business and corporate behavior is seemingly absurd. Nevertheless, good attempts with noble causes could produce sustainable results and merger could serve an excellent instrument to turn that reality.

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Canada NewsWire Ltd.(2001).HR Function Can Help Increase Merger Success, According to Towers Perrin's New M＆A Guide: Making Mergers Work is a Practical Handbook for Executives Engaged in Mergers, Acquisitions, and Spin-Offs.