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MERGERS CAN BE SUCCESSFUL Mergers are always headline news. Some financial commentators even regard them as an indicator of the economic health of a nation. Which is strange when you consider that most mergers and acquisitions fail. The deals themselves go through, and regardless of the high costs, the bankers get paid. But then the expected economies of scale prove elusive and there are clashes of corporate cultures. Employees become nervous and less efficient as they worry about losing their jobs. Depending on whose research you believe, 50 to 80 per cent of acquisitions fail to fulfil the strategic objective for which they were designed. Given all this, it is interesting to see a merger which is successful. And that is what seems to have happened when Promo and Truck Ads merged.Eva Lendel started Promo in 1991, the same year Paul Watson founded Truck Ads. Both companies did the same thing: they ran poster campaigns on trucks for major advertisers. It was a new medium and both companies expanded quickly. It looked so easy and profitable that lots of small operators came into the business – which worried both of them because they felt that these new companies did not really know what they were doing. This, they felt, could have a negative effect on all companies in this sector. So Lendel and Watson formed a trade association to protect the reputation of their businesses. 'Out of all these companies that mushroomed up,’ says Watson, ‘almost none have survived. They just didn’t offer a professional service.' < 4 more paragraphs follow; 530 words in total > |
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