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Mergers and acquisitionsTable 6.1Comparison of reasons for embarking on a merger or acquisitionReason for Advantages Disadvantages OrganizationalM&A activityimplicationsGrowth Immediate revenue More work for the Top team required togrowth pleases top team. make a step changeshareholders. Hard to sustain the in performance. NewReduction in benefits once initial arrivals in top team.competition (if other savings have been Probably someparty is competitor). made. administrativeGood way of Cultural problems efficiencies.overcoming barriers often hard to Integration in someto entry to specific overcome, thus areas if beneficial toareas of business. potential not realized. results.Synergy May offer significant, More subtle forms of Top teams need toeasy cost-reduction synergy such as work closely togetherbenefits. product or service on key areas ofAttractive concept gains may be difficult synergy. Other areasfor employees to realize without left intact.(unless they have‘heard it all before’).significant effort.Cultural issues maycause problems thatare hard to overcome.Diversification May offer the Economic theory Loosely coupledpossibility for suggests that management teams,entering new, potential gains of joint reporting, someinaccessible markets. entering more administrativeAllows company to profitable profit efficiencies, separateexpand its portfolio streams may not be identities and logos.if uncertain about realized.current businesslevels.May be hard for topteam to agreestrategy due to littleunderstanding ofeach other’s businessareas.227