Mergers and acquisitions have been happening more frequently in the last year or two, driven by a tough macroeconomic environment where companies are seeking ways to cut costs, scale, or survive. Some of the most notable recent examples include UBS acquiring Credit Suisse, which was a huge deal in the banking world, and other high-profile cases like Microsoft’s acquisition of Activision Blizzard and Adobe’s acquisition of Figma. These deals highlight the growing trend of consolidation as businesses brace for uncertainty, but also take advantage of opportunities for both companies to grow.
While M&As make headlines, the reality for the companies and especially their employees can be much more complex.
How Does It Work Out for Companies?
From a high-level perspective, the acquiring company typically aims to realise synergies and to also achieve economies of scale. Both find areas where the two companies can integrate smoothly, eliminate redundancies and boost profitability. But this doesn’t happen without significant challenges. Often, there’s a cultural clash between the two organisations.
Even successful mergers, like Disney’s acquisition of Pixar, involved the careful balancing of management styles and operational approaches so that they could create the best movies.
The outlook can often be murky for employees of the company being acquired. Bluntly, there’s no need for two people in the same role. While upper management might retain key figures, many employees are left facing an uncertain future for themselves. Roles are often evaluated based on whether they are redundant, meaning it’s essential for any employee to assess their skills even before any M&A situation might happen.
How to Protect Yourself In An M&A Situation
If you find yourself in a company that’s being acquired, the most important questions to ask are these:
Is your skill set unique enough that you’ll be kept? Do you bring something to the table that the acquiring company values highly?
Is your resume up to date, and are you actively networking? Even if you survive the first wave of cuts, it’s smart always to be ready to look for the next opportunity. A merger often leads to restructuring, and keeping your resume polished and your connections strong ensures you won’t be caught off guard in an unfortunate event.
Successful Mergers
While some M&As fall apart or fail to achieve their goals, there are success stories. Disney and Pixar, for example, have flourished together. Disney gained the creative edge that Pixar is known for, while Pixar benefited from Disney’s global reach and resources.
Similarly, Facebook’s acquisition of Instagram transformed both companies, as Facebook provided the capital and platform Instagram needed to scale rapidly. People thought it was preposterous when Facebook acquired Instagram for $1 billion in 2012. Today, Instagram is worth more than $100 billion as a standalone company. That certainly worked out.
When M&As Don’t Work Out
But not all M&As go smoothly. A notable example closer to home was Grab’s proposed acquisition of Transcab in Singapore, which the government blocked. The deal was scrutinised over competition concerns and potential price hikes for consumers, proving that even well-intentioned mergers can face significant roadblocks from regulators.
While M&A activity often involves large corporations, small and medium-sized businesses can be just as, if not more, affected by these deals. For smaller companies, the impact of being acquired can be more immediate and intense for the team. With fewer layers of management and less operational complexity, SMBs may find it harder to shield their employees from layoffs or restructuring.
At the same time, though, these businesses are often more dependent on key personnel and long-standing client relationships, which can be disrupted when ownership changes hands. So, there might be an advantage to being in an SMB that gets acquired, as employees might still be needed to keep the business running. Having said that, the integration process can be more turbulent for SMBs, with cultural and operational shifts happening more rapidly.
The Road Ahead
Looking ahead, M&A activity is expected to continue rising as economic uncertainty, inflation, and industry consolidation drive companies to seek partnerships or acquisitions to remain competitive.
M&As are about finding synergies, but they can also bring about uncertainty for employees, cultural shifts, and operational difficulties. For workers, the key is staying adaptable, ensuring that your skill set remains relevant, and maintaining a strong professional network in case things take an unexpected turn.
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