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.
- Organization Culture
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
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.