A merger occurs when two independent companies combine to create a new entity. Mergers are more common in the technology, healthcare, retail and financial sectors where companies seek to expand into different markets, reduce operational costs, unite products or services, grow market share, and eliminate competitors. There are five major types of mergers: horizontal, vertical, product-extension, market-extension and conglomerate mergers.
During M&A, employees experience anxiety and uncertainty about their job security and restructured roles. This can result in low morale and decreased productivity, but prioritizing employee well-being, communication channels for feedback, recognition of hard work, and cultural integration efforts can help ease the transition. As a result, those that embrace the changes and align their goals with the company’s strategic direction are more likely to receive increased opportunity for career growth.
Some employees may also fear the loss of their perks or benefits, such as healthcare plans, 401(k)s, vacation time, stock options and fringe benefits like gym memberships and commuter stipends, which are sometimes negotiated into the compensation package during a merger. HR teams can address this concern by establishing clear communication channels and redefining compensation and benefits to ensure the merged company is meeting the needs of its employees going forward.
Another concern of shareholders is the impact a merger will have on company shares. Mergers that make a lot of sense from an investment standpoint can increase the value of an acquirer’s share, while those that are not aligned with investor expectations can decrease it.
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