Discussion response(a24) | Accounting homework help

A merger or acquisition of two companies can have its advantages and disadvantages. Some of the advantages of a merger may include the enhanced performance of the two merged companies, their financial gains, and the overall shareholders long-term value; improves the purchasing power to help the company negotiate bulk orders that lead to cost efficiency. The merger also combines the talent of both companies, providing better opportunities for sales.
The disadvantages of a merger or acquisition may include the reduction in competition due to merger, which causes increase in prices; loss of jobs may be the result of a merger, or an acquired company may be shut down due to poor performance. Also, when there is a culture difference between the two companies, conflict may arise, making it difficult to work together.
       A merger or acquisition needs to be analyzed, advantages versus disadvantages need to be weighed before moving forward with a merge or acquisition. A company can benefit from a merge, but it can also hurt the company is the company it is merging with has so much debt that it makes the company go under.
Mergers and Acquisitions: Definition, Difference, Process, Pros and Cons. (n.d.). Retrieved October 28, 2020, from https://efinancemanagement.com/mergers-and-acquisitions
Hose, C. (2019, February 11). Advantages and Disadvantages of Employees of Mergers. Retrieved October 28, 2020, from https://bizfluent.com/info-11386619-advantages-disadvantages-employees-mergers.html
From the non-financial accounting perspective, do you think mergers and acquisitions are a good thing or a bad thing and why?
I think from a business standpoint mergers and acquisitions can be beneficial to the company as the company is now absorbing another. This absorption has the potential to expand the parent company’s type of business allowing them to get into a market that they had previously not been in. It allows for additional R&D projects to be worked on because now the parent company has the equivalent of two R&D departments if they didn’t downsize during the acquisition or merger. It also has the potential to create a more inclusive and diverse workforce which in turn could promote more creativity when handling tasks.
However, I think from a customer standpoint it is often negative as many times customer service suffers following a merger or acquisition. As Vanamburg (2020) discusses in his article, oftentimes customers have varied views and expectations that may not be met following a merger. In addition to expectations not being met, some locations may close which could create poor customer satisfaction because now the customer may have to travel to a different, less convenient location (Vanamburg, 2020). Customer service may suffer as well, because now the parent company as potentially twice the customer base to serve but may have downsized on the staff (Vanamburg, 2020).
I think the primary purpose of a merger and acquisition is to benefit the shareholders and parent company while also attempting to reduce the amount of expenditures post combination (Vanamburg, 2020). This results in the level of service potentially decreasing from what was previously offered by the companies as individuals. As Vanamburg (2020) states, many companies often purchase companies that are of low quality or may be financially unstable (which makes them cheap to purchase), but what is not considered is the effects of combining two potentially low-quality companies. He states that, typically, large companies that are doing well do not make a habit of buying other large companies that are doing well (Vanamburg, 2020). This would suggest that its lower-quality companies being merged or acquired, and if there is no investment to improve or customers leave due to dissatisfaction that the parent company is not improving its quality (Vanamburg, 2020).
Vanamburg, D. (2020, February 11). Good for business, bad for customers? The double-edged sword of M&A. ACSI. Retrieved from https://www.acsimatters.com/2020/02/11/how-mergers-and-acquisitions-impact-customers/

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