Merger and Acquisitions: Benefits to Shareholders, Companies, Employees, and Society

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A company, its employees, shareholders, and society often encounter benefits and tradeoffs in mergers and acquisitions. The processes are complex and affect various participating parties (Haeruddin, 2017). The subsequent section highlights the benefits and tradeoffs for each stakeholder.
Mergers and acquisitions benefit companies more than any other stakeholder. For instance, the processes can increase a specific company’s competitive advantage over its established competitors. Acquiring or merging with another company combines many useful resources, skills, and a pool of clients (Do Carmo et al., 2016). Therefore, the firm can increase its reach through marketing and products and services offered, allowing them to compete favorably within the marketplace. Mergers and acquisitions operations can also promote opportunities for a firm’s diversification, enabling it to decrease potential risks and reinforce its specific business portfolio (Arikan & Stulz, 2016). Also, synergies from integrating business activities for merging firms and eradicating dismissals can enhance efficiency and cost-effectiveness. However, a company can also face tradeoffs. For example, Gautam (2022) argued that companies face problems incorporating different systems, processes, and cultures.
Secondly, mergers and acquisitions’ influence on employees is considerable. As some workers benefit from practice, others may remain disappointed and experience tradeoffs rather than benefits. Specifically, Kempton and Sarala (2021) conducted a literature review on employees’ perspectives concerning mergers and acquisitions. They established that some workers benefit through gaining more career opportunities, improved working morale, diversified job roles, and using new technologies or resources. However, some mergers and acquisition transactions discourage workers in several approaches, making them face uncertainties, worry, and possible undesirable outcomes. For example, workplace restructuring and downsizing occur in most of these processes, triggering job insecurities and panic among workers (Kurgat, 2016). Furthermore, cultural differences between the firms working together after merging may affect employees’ productivity, satisfaction, and morale to complete their duties successfully. Effective communication, collaboration, and understanding after the two companies’ integration are vital to address tradeoffs and foster the critical transition.
Thirdly, shareholders also benefit when corporations merge. If an acquisition or merger becomes successful, creates substantial synergies, and economies of scale, shareholders will likely enjoy great profits and realize boosted shareholder value (Farrell & Shapiro, 2000). The benefits originate from the firms saving on costs, increasing th...