Advanced Accounting Week 2 Discussion
From a non-financial accounting perspective, I believe that mergers and acquisitions are abad thing. Mergers have various financial advantages. However, mergers and acquisitionsintroduce various complexities that make it difficult to manage them. One problem relates tocorporate culture. Mergers and acquisitions interfere with the corporate culture of the businessesinvolved. Mergers demand that core values need to […]
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From a non-financial accounting perspective, I believe that mergers and acquisitions are a
bad thing. Mergers have various financial advantages. However, mergers and acquisitions
introduce various complexities that make it difficult to manage them. One problem relates to
corporate culture. Mergers and acquisitions interfere with the corporate culture of the businesses
involved. Mergers demand that core values need to be altered. It becomes difficult to establish a
new corporate culture that will help ensure that the new company advances to greater heights. It
takes time before a new culture is established (Allenström & Njurell, 2010). Employees may
resist change, and the management has to take it upon themselves to sell the new company goals
and ideas.
Mergers and acquisitions may result in an incompatible management team. When two
companies come together, it may result in an incompatible management team that may hinder the
progress of the company as well as destroy the core values that the two companies stand for
(Allenström & Njurell, 2010). Quality deficits in the management can particularly be costly and
could have adverse implications on the new company. Another risk stems from technology. The
technologies adopted by the two companies in a merger or an acquisition may be incompatible.
The integration of technologies may result in added costs as well as added risks. Mergers and
acquisitions also result in the loss of valuable employees (Allenström & Njurell, 2010).
Combining two teams may result in some positions becoming redundant. The result is that some
employees may have their contracts terminated. Firing employees may have a bearing on the
merger. It could send the wrong message to consumers and society in general. It could also result
in a distorted company image, which is undesirable.
References
Allenström, E., & Njurell, F. (2010). Non-financial risk assesment in mergers, acquistions and
investments. Identifying sources of business risk in the ICT industry. rapport nr.:
Management 10: 14.
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