Aligning Mergers and Acquisitions with Corporate Strategy

In the previous section we learnt about the motives for acquisition. In this section, we will learn how to align Mergers and Acquisitions (M and A) with corporate strategy.

A successful M and A execution and integration is achieved only when the M and  A  strategy aligns  with  the  companies corporate strategy. These corporate strategies may be varied including company's growth, becoming more competitive in market, product extension or risk reduction and so on. Acquisition should satisfy the criteria or add valve to the corporate strategy. Hence it should be aligned with the company's strategy.

M and A is a strong strategic tool for a company. Successful M and A includes multiple steps in an elaborate process, which is quite similar to the corporate strategic planning. Acquirer should always consider how to optimise the M and A in the framework of an overall corporate strategy. Let us now review how merger and acquisitions create value in particular:

• The existing company's structure may be changed due to investment structure.  The  investment  structure  usually  gets  altered  by  various financing  transaction  in  the  event  of  acquisition  with  consequential impact on the asset.

• While making a horizontal or vertical acquisition, the existing company's image will be modified in the market place. Hence, the communication strategies desired should to be adapted to enhance public perception in a positive way.
• Also, there will be change in operational performance of shareholders value, which is the most obvious change.