Given the rising trend of companies combining forces to optimize scale, reduce tax and drive complementary R&D resources, it is perhaps useful to explore some of the unintended results of such moves.
The key issues with mega-mergers apart from economic have to be the impact on trading partners and also the political implications.
Because of competition legislation it is inevitable that the merger process will be delayed while the authorities explore the potential impact on markets.
For instance, the Publicis-Omnicon merger, announced last July with the deal's closing delayed at least six months because of regulatory issues, has already resulted in the loss of more than $1.5 billion of client work and they face a fight to retain billions more, including a huge Samsung contract, just as the two advertising firms struggle to keep their merger on track.
Client losses already include Microsoft, Danone, GSK, Sony, and Marks & Spencer.
Another consequence has to be the inevitable loss of talent, with the usual result of the best talent finding it easier to move...
Again, high US taxation is causing major American firms to combine foreign mergers with relocation of the combined headquarters to more benign tax environments, such as the Pfizer-AstraZeneca, Chiquita-Fyffes, and a host of other similar deals.
The immediate consequence will obviously be the inevitable moves as the US authorities attempt to apply international pressure to frustrate or delay such potential losses of corporation tax, resulting in more delays
Again the unintended consequence of good staff leaving to avoid career uncertainties in what is a short life, after all...
However, for those on the perimeters, opportunities abound...
In other words, apart from the new availability of good talent, such mergers will provide bargains in terms of brands that become a problem in terms of competition legislation, and a sell-off at any price becomes increasingly attractive...
Watch carefully...
The key issues with mega-mergers apart from economic have to be the impact on trading partners and also the political implications.
Because of competition legislation it is inevitable that the merger process will be delayed while the authorities explore the potential impact on markets.
For instance, the Publicis-Omnicon merger, announced last July with the deal's closing delayed at least six months because of regulatory issues, has already resulted in the loss of more than $1.5 billion of client work and they face a fight to retain billions more, including a huge Samsung contract, just as the two advertising firms struggle to keep their merger on track.
Client losses already include Microsoft, Danone, GSK, Sony, and Marks & Spencer.
Another consequence has to be the inevitable loss of talent, with the usual result of the best talent finding it easier to move...
Again, high US taxation is causing major American firms to combine foreign mergers with relocation of the combined headquarters to more benign tax environments, such as the Pfizer-AstraZeneca, Chiquita-Fyffes, and a host of other similar deals.
The immediate consequence will obviously be the inevitable moves as the US authorities attempt to apply international pressure to frustrate or delay such potential losses of corporation tax, resulting in more delays
Again the unintended consequence of good staff leaving to avoid career uncertainties in what is a short life, after all...
However, for those on the perimeters, opportunities abound...
In other words, apart from the new availability of good talent, such mergers will provide bargains in terms of brands that become a problem in terms of competition legislation, and a sell-off at any price becomes increasingly attractive...
Watch carefully...
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