Mergers give companies plenty of advantages, from cost savings to opportunities for larger market shares. These kinds of transactions also redound to customers in various ways, such as the following:
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Prices
Prices, after mergers and acquisitions, can either go up or down. Because of the removal of at least one competitor in the market, the remaining companies can apply a coordinated price increase. However, merged companies can also lower their prices, if they decide to pass on the cost savings to their customers.
Customer service
Customer service is generally enhanced after a merger because the merged entity would be able to deliver improved products or services at a more efficient rate. Smaller companies, which previously had no access to the facilities and strategies of large businesses, will be able to enhance their products or services. There are instances, however, where mergers and acquisitions have negative implications on customer service, especially during the beginning stages of the transaction.
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Variety
Consumer choices can also change in two ways after a merger. It can increase when the merged companies offer a wider selection of products and services, as they can do so more efficiently because of economies of scale. But variety can also be compromised if the branding of the merged businesses requires them to remove some or a set of their products from the market.
Luis Manuel Ramirez is the CEO of TodoModo, a company that has acquired and integrated more than $1 billion in mergers and acquisition deals. Visit the company’s official website for more information about the company.
