How to tell if a merger makes sense?

Thinking about inorganic growth, well make sure that you have done all your Home Work correct otherwise you might be the one who gains nothing out of it. Before you are going in for a merger make sure that you have fulfilled all the below mentioned conditions, so that the merger given you synergies and not d-energies.

The points to be kept in mind are:

• Do you understand the new industry:  Remember when there were lots of “conglomerates” out there? Companies that literally made everything from soup to nuts to turbines? The current trend is to stay within your industry, in an area that your organization understands.

• Do you do your homework about the company well:  You shouldn’t race into a merger. It’s very important that the company spends time doing all appropriate due diligence (fancy corporate speak for doing your homework). There have been too many examples of purchasers who discovered ancient factories, hidden debts and declining customers after a sale already went through.

• Learn from others mistakes: Every city seems to have one restaurant location that’s like a revolving door — it’s constantly changing owners. Be wary of thinking you can fix other people’s messes. I’m not saying that miracles aren’t possible; it’s just important to learn from history before a merger is put into motion.

• Make sure that you have the people who can handle the merged company: The merger world is full of great dealmakers who have little skill at actually making the new business work properly. Sure you can make a deal happen, but do you have the firepower to make it work over the long haul?

• Can you admit failure: It is not only possible for a new acquisition to fail; there have been cases in which the new company has actually damaged the company purchasing it. That’s why it’s important to keep an eye on the merger partner to be sure that it adds value. Just as lifeguards learn that sometimes you have to leave someone who is drowning to save your own life, some mergers have to be accepted as a failure so everyone can move on.

If you follow all these, than I assure you that you would never fail in any merger, whether it is for a company or any other merger in life. I think I have not missed anything, but if you feel so, do make me know about it.