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Douglas Frank PhD
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Organization Design:  A Key to Mergers, Acquisitions, and Divestitures

Mergers, acquisitions, and divestitures continue to trigger organizational restructurings.

Worldwide merger volume in the second quarter of 2013 was half a trillion dollars, with 40% of that in the US alone. While merger activity is highly cyclical and is well off pre-crisis peaks, the overall trend is up and we can expect it to accelerate as economic conditions improve.

Yet one consulting firm estimates that 70 percent of mergers fail to increase shareholder value. This may be due to the fact that mergers often bring together two organizations with distinctly different designs and cultures, and harmonizing these is a serious challenge. This may be one reason why companies typically experience high turnover after a merger.

Careful attention to the organization design can help ensure that mergers achieve their intended results, and may even flag mergers in the future that have a good chance of failing due to fundamental organizational incompatibility.