Merger is a type of M&A transaction that involves two companies joining together to form a single entity. The resulting company may be owned by both the original and acquired companies or entirely by one of them. Companies often merge in order to gain greater market presence or expand into new products and markets. There are five major types of mergers—horizontal, vertical, product-extension, market-extension and conglomerate—each serving a unique strategic purpose.
Employees
A key consideration when navigating M&A is the impact on employees. A common refrain heard from post-M&A staff is, “It’s not the same since they merged.” While this may be a result of some cultural changes, it can also stem from fear around job security and concerns about new roles or structures.
When companies merge, they typically combine their existing operations with the M&A target’s assets and operating structure, rather than purchasing the whole company. This allows the acquiring company to cherry-pick only the assets and liabilities it wants while avoiding the unknowns that come with a full purchase of the target.
Stockholders can receive payment in cash or stock, based on the value of the acquired shares. In either case, the resulting share distribution can significantly alter the percentage of ownership in the combined entity.
While most eyes are on leadership and operations during M&A, HR is working overtime behind the scenes, tasked with merging policies, aligning cultures, ensuring redundancies are handled properly, and keeping morale afloat. Prioritizing employee well-being, offering workshops and other support services to ease the transition, and ensuring transparent communication are key components of a successful M&A.
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