According to a study by Smolowitz and Hillger, the following factors were ranked as
reasons for acquisitions poor performance in post merger (1) cultural incompatibility
(2) clashing management styles and egos (3) inability to implement change and pre
merger (4) poor forecasting (5) excessive optimism about synergy.Three approaches can be used to value a business: The income approach is a general
way of determining the value using a method to convert anticipated financial benefits,
such as cash flows, into a present single amount. The market approach is a general way
of determining a value comparing the asset to similar assets that have been sold.The asset (or cost) approach is a general way of determining the value based on the
individual values of the assets of that business less its liabilities. Buyers can be of
different motives for acquiring businesses and willing to pay at different prices for the
same business.The process of merging two firms creates havoc at every level of the organization.
Therefore Managers considering an acquisition should be conservative in their
estimates of benefits (requires understanding of target products, markets, and
competition) and generous for time budgeted to achieve these benefits.In the end, antitrust enforcement is an inexact science that can have a major impact on
M&A activity. A plan conceived and implemented swiftly by the firms’ executives,
with their full and active leadership, improves the chances for a successful M&A
transition.Also, seek the advice of knowledgeable experts on the implementation process. In
other to achieve the preset plans there should be an atmosphere of realistic and
accurate strategy put in place to maintain the effectiveness of the overall staff team❖ FAILURE AND REORGANIZATION