Mergers and Reorganization

At the present time mergers, and other less complete collaborative arrangements, are the order of the day. The reasons for such joint ventures are manifold.

Ideally, a joint venture or merger should come about as a free decision on the part of two healthy expanding enterprises who see integration as a means of strengthening both their positions. In practice, however, the freedom of decision of the partners varies according to whether both are healthy or both are undergoing difficulties, or whether one is strong and one weak. In the latter case a merger is a cover-up for a takeover.

Whenever such a joint venture takes place, two enterprises, two systems with their own often different policies, have to grow together to form a new, larger enterprise, a single system with new policies and new organizational principles. A merger is therefore always a process of intensive social change; and in practice it is usually unplanned social change.

Whether the process of integration is carried out horizontally, vertically, laterally, or in the form of a chain merger, the expectation is always that the whole result of such a combining of forces will be greater than the sum of the parts. Mergers are made according to the formula “2 + 2 = 5;” but this does not become reality unless the merger is carried out as a planned revolution. On the morning after the night before, when the ceremonial pen has been laid aside and the champagne glasses have been cleared away, the new ...

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