Synergy Realization in Mergers and Acquisitions

This article discusses the ways to ensure synergy realization in mergers and acquisitions, such as improved market reach, savings from reduction of people, acquisition of new talent and technology, and more. It also covers the barriers that may prevent synergy realization, including high employee resistance, communication issues, high competition, and low profits.

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Strategic Analysis
Name
Institution
1. What would the corporate parents need to do to ensure the realization of the sorts of
synergies described above?
Synergy refers to the act of two companies combining to operate as one with greater strength and
performance than before (Garzella, &Fiorentino, 2014 pg 1200).Many companies cite synergy as
one of the justifications for unions and achievements. To ensure the realization of the synergy of
premedia and about, thecorporate parent need to ensure that the company meets the following;
Improved market reach-Merging the two companies will bring forth large market coverage.
Premedia being the leading traditional company and About.com being the leading online
company, when merged will put together their targeted population as a single company.
Savings from reduction of people-Reducing the number of employees in the company would
encourage saving. When each company worked individually, it hired quite big number of
employees compared to now. The salary paid to the employees can be saved to the company
after merging. (Antila, Popova,Akamine,Sullivan, & Hen, 2011). Company is an online site and
the premedia also has some websites whichcanbehandled together.
Acquisition of new talent and technology-Premedia combined with About, should put their
talents and technology in a pool and share their knowledge in improving the productivity of the

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company (Kopecka,Rozkova, &Sediva, 2013 pg 291). This enhances the growth of the company
and outdoes their competitors.
Enhanced visibility of a company is acquired through merging of the companies. A bigger
company tents to be well known than a small company. When it is well known, it means that
productivity increases since there are many willing customers. Revenue would be generated-
premedia planned to take advantage of cross marketing and shared content with the new merger.
It would cut back its expenses by doing its internet business with About account.
Standardized management practices-The two companies would work smoothly by putting
together their strengths and eliminating the weaknesses. This helps creating opportunities to
expand sales in the new and existing market. The breadth of experience-the longer period of time
a company has served a particular market the more experienced they are. This experience
enables them to strive for success in their business.Both premedia and about have enough
experience to meet competitors in the new market.
2. What might prevent the realization of those synergies?
On the other hand, realization of synergies may be prevented. First, high employee resistance
can prevent realization of synergies. When the company managers introduce ideas or process to
be put into practice for the benefit of the company, then a big number of the employees resist
claiming that it is cumbersome (Micklavzina, &Stovall, Sprint Communications, 2010, Np). This
negative reaction can bring lack of unity and cooperation in the working area hence failure to
realize any improvement. Secondly, the way of communication in any business is very
important.In the case of a company a certain hierarchy is followed. When information is
communicated in the wrong way and time it would bring a negative impact to the company. For

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the case of premedia, the advertisements and production of magazines should be released at the
right time without delay when the message they contain is ready to be heard otherwise it will
lose its meaning to the community. This therefore declines the realization of synergies.
High competition is also a barrier of synergy realization. When a company faces steep
competition from other companies dealing with the same product or service, it might face
difficulties in terms succeed in that area. For example, in the case of premedia and about dealing
with internet site may face competition from other websites offering better service than them.
When customer fails to visit their site it reflects negativity to the quality of services they offer to
their customers (Nevo, &Wade, 2010 pg 1732).
Low profits-the main aim of any business to start is to make profit. A business can fail to make
profit due to many reasons. For instance, if premedia and About Company fails to satisfy the
customers need by offering either poor services oroffering their internet services at a higher
price, customers will opt for another website offering the same service which is of high quality
and at a fair price.
As much as merging of two or more companies is of benefit, it is also challenging. For one
business to agree to combine with another and become one requires a lot of consultation of the
owners (Vazirani, 2012 Np). It may be of discourage to some employees for some of the
directors will be demoted to accommodate the changes that only one leader is required. On the
other hand, it encourages a company to move forward and be placed at a higher level in case of
competition.

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References
Garzella, S. and Fiorentino, R., 2014. A synergy measurement model to support the pre-deal
decision making in mergers and acquisitions. Management Decision, 52(6), pp.1194-1216.
Karpova, N.N., Pickenhagen, A., Lindholm, J., Tiraboschi, E., Kulesskaya, N., Ágústsdóttir, A.,
Antila, H., Popova, D., Akamine, Y., Sullivan, R. and Hen, R., 2011. Fear erasure in mice
requires synergy between antidepressant drugs and extinction training. Science, 334(6063),
Kopecka, J., Rozkova, D. and Sediva, A., 2013. Plasmacytoid DCs, exposed to TSLP in synergy
with TLR ligands, acquire significant potential towards Th2 polarization. Medical science
monitor basic research, 19, p.291.
Micklavzina, C.L. and Stovall, J.W., Sprint Communications Co LP, 2010. Synergy tracking
tool. U.S. Patent 7,752,068.
Nevo, S. and Wade, M.R., 2010. The formation and value of IT-enabled resources: antecedents
and consequences of synergistic relationships. Mis Quarterly, pp.163-183.
pp.1731-1734.
Vazirani, N., 2012. Mergers and Acquisitions Performance Evaluation-A Literature Review.
SIES Journal of Management, 8(2).