Learning from the biggest merger busts

Every so often in the business industry, a merger or acquisition comes along that will either change the face of the business or become one of the most talked-about and scrutinized cautionary tales. Because of the massive amount of funding involved in mergers and acquisitions, each example can spring forth numerous lessons to be learned.

Here are some of the lessons budding business owners and managers can learn from two of the biggest mergers and acquisitions busts in modern times.

Vodafone and Mannesmann

One of the biggest and most-hyped mergers was smashed to bits by a number of seriously misplaced expectations from the folks at Vodafone. It was a gamble on Vodafone’s part, one which they lost big time.

What young business owners, executives, and upper management can pick up from this is that paying a huge sum doesn’t ensure success in mergers. Mergers and acquisitions are always a gamble and will never be “paid off” to be successful. There will always be significant risks involved, with each having to be dealt with decisively.

Time Warner and AOL

This was one of the more unexpected merger busts since from afar, a lot of business experts thought the combination of these two companies would produce wonders. However, after nine years, the only thing the merger had to show for was a $200 billion loss.

The lesson here is a very important, yet simple. Companies have different cultures, and this heavily affects mergers. To avoid clashing cultures, companies that are about to merge should hold seminars and workshops on both sides to set everyone’s expectations.

Michael Saltzstein is a visionary leader of global risk services, financial structures, multi-line claims, and strategic planning and enterprise initiatives. In the past, he has optimized award-winning risk programs, economic strategies, reserving, and best practices and state-of-the-art coverage. For more about Michael and his work, check out this page.