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The
past couple of years have seen a rise in the increase of mergers and
acquisitions in the construction industry. This increase has been attributed to
the fact that most financial institutions prefer dealing with bigger companies.
Another contributing factor to the increase in consolidation of construction
companies through mergers and acquisitions is the efficiency of these
consolidated companies. It is believed that a larger construction company is
way more efficient than smaller ones hence the consolidation.
Mergers
and acquisitions are highly beneficial as they do way more than just reduce the
cost of production. Merging of companies increases their conjoined resources
which makes the company more efficient. In terms of the construction industry
the companies are able to share their equipment and skilled personnel. This
makes them to be better suited to deal with larger projects or even division of
labor to cater for more than one project at a single time. The following are
critical factors that need to be considered for a successful acquisition or
merging in the construction industry;
One
of the most crucial factors in merging and acquisition is the aspect of
leadership. Leadership covers all the aspects of the merger. The successfulness
of the mergers and acquisitions relies heavily on the leadership. The
effectiveness of the leader goes a long way in maintaining the successful
running of the companies after the mergers and acquisitions have happened.
Since
merging and acquisitions involves more than one companies there needs to be an
effective leadership. Effective leadership ensures that aspects such as intellectual
capability, mental capability, change management and human relations all work
together to bring about the desired results.
Another
important role of leadership as the changes of mergers and acquisition occur is
the commitment and involvement of the leaders. Leaders in the construction
industry need to be deeply committed personally and also actively involved in
the process. The leaders need to ensure that they are aware of all the
intricate processes that are involved in the change.
By
being aware they are able to control the normal running of the processes to
ensure that they all work out as they are expected. This will play a key role
in successful merging and acquisition as any issues that arise are dealt with
before they affect the merger or acquisition. Exceptional leadership have a
holistic comprehension of their organization and the changes that are coming as
a result of the merger or acquisition.
Communication
as a factor in merger and acquisition is very essential. Since merging and
acquisition involves more than one company there needs to interrelation between
the involved parties.
Communication
can be formal or informal. Though formal communication is essential informal
communication is also important. Formal communication is required by law to ensure
that there is no regulation that is broken. Especially in the field of
construction formal communication is required to know the assets that each
company is bringing to the table, communication between companies is essential
in that it allows for the involved parties to know what they are getting into
through acquisitions or mergers.
Informal
communication on the other hand is important in that it involves walking around
by the management communicating with various department professionals and cross
divisional training for both managers and employees. By utilizing the informal
communication strategies it becomes easier to know other vital information that
may not be presented in the formal communication channels.
A
balance of both formal and informal communication increases the chances of
success for any merger or acquisition. In the construction industry informal
communication is very crucial in determining information that may be too
intricate to be outlined in the formal communication avenues.
Every
organization has its unique culture that is not alike to any other company. The
culture of an organization entails its history, internal and external factors
that all contribute to their values, beliefs and even practices. Especially in
the construction industry the culture of one organization is distinct from any
other. The change that is brought about by merging or acquisition affects the
culture of the organizations involved.
When
two or more construction companies merge the cultures that are focused upon are
the most tangible in terms of; improvement opportunities, a new organization
chart, and product migration plans. It is, therefore, crucial to ensure that
the cultures of each and every company are compatible.
The failure of most mergers or acquisitions is attributed to the incompatibility of the companies. For successful mergers or acquisitions of construction companies all the cultures of the companies need to be examined and focused upon. For successful merging or acquisition a thorough cultural analysis needs to be carried out. Cultural understanding also needs to be focused on to ensure that when the change occurs the cultures of the companies are able to change to fit the new organization.
With
the rise of mergers and acquisitions in the construction industries it is
important for companies to concentrate on achieving successful mergers and
acquisitions. The success of any merger or acquisition relies on their
leadership, their communication strategies and the culture. All these aspects
contribute to the successful merging and acquisition of companies. Mergers and
acquisitions are an effective way of boosting business within an organization.
There are various benefits that come with merging and acquisition especially in
the construction industry. It is, therefore, crucial to ensure that measures
are put in place to ensure that the mergers or acquisitions are successful and
bring about the intended benefits.