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Why Mergers Are Often Bad For Business
from the losing-site-of-the-customer dept
The results of a new Business Week study are unlikely to surprise very many, but it would be good if some big company dealmakers got their head around the message. It appears that, for all the big corporate mergers happening, many of them tend to piss off their customers in a big way. What really happens is that the merged company starts focusing on "savings" rather than its customers. So it looks towards what things they can cut out to emphasize the "synergies" of the merger and make Wall Street happy. Of course, what that upheaval does is make life very annoying for customers -- many of whom don't forgive the company very easily. In fact, the study found that customer satisfaction ratings for merged companies tend to stay low for many years following the merger. A few companies have figured the formula out, and it works by focusing much more on the customer experience than the cost savings initially. Over time, it's easier to recognize the real savings, but simply cutting away left and right not only damages the company's core, but pisses off customers a great deal.
Reader Comments
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Bad Will:
I expect the MBA types to handle this issue quite simply. Just add a "bad will" value to the merger when calculating its value. In a merger, one company usually gets the other's "good will" already.
- The Precision Blogger
http://precision-blogging.blogspot.com
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Cash in
One big factor in mergers and that no one involved will accept, is the big fat check CEO's get from closing the deal. They will give you all the "corporate correct" answers:
- Synergies!
- Cost Reduction
- Know How gains
- Good Will (as someone pointed out)
etc.
But no CEO will tell you, "Yeah, the deal is good for all those things but in the end I get also a big fat check".
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