Basically, after mergers and acquisition, it important to strategize how various business operation will be structured. First, mergers involve integrating governance as well as a task force of different firms. Thus, the first operation strategy would be to review staffs who have been sourced from Tyson Foods and Sanderson Farms. The importance of reviewing current team of the workforce is to identify gaps or redundancies and also creating plans that will enable collaboration between both teams ( Abbas et al., 2017). Another operation strategy for these firms’ merger is to develop a marketing plan. This means that the new business will need new marketing tools such as mission statement, logo, website and other activities to be carried on the copyright. Some of the marketing operating will require structure from the scratch or like starting a new business. Lastly, it is the effort to meet the existing and current customers and convincing them that the mergers will increase their needs and satisfaction.
Further, the benefits of post-mergers can either be qualitative or quantitative. Among the quantifiable benefits is the reduction of the overheads and costs. The merger will help the two companies to share their marketing budgets, lower fixed costs, and increased purchasing power. For instance, the cost of licenses and other legal fees will have incurred for as one firm than individually ( Harrison, 2017) . Reduction of costs means that the net margin will likely increase. Further, due to increased assets, the current ratio will be high the new firm will be able to settle the current liabilities more efficiently with the current assets. Last but not the least among the post-merger benefits is the reduction of the competition level. Tyson Foods and Sanderson Farms are rivals in the same industry and thus, their merger means that they will have increased market share and customer base. The ratio analysis below the average of the previous performance of the combined operation of the firms assuming that the merger had already been negotiated.
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Post-Merger Ratio Analysis |
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2017 |
2016 |
2015 |
2014 |
|
| Net margin |
7.96% |
5.67% |
6.25% |
5.97% |
| Return on assets |
13.26% |
9.80% |
12.61% |
13.87% |
| Current ratio |
2.70 |
2.85 |
2.62 |
2.49 |
| Debt ratio |
0.41 |
0.39 |
0.37 |
0.38 |
| Inventory turnover |
10.31 |
10.48 |
11.71 |
12.41 |
References
Abbas, Q., Hunjra, A. I., Saeed, R., & Ijaz, M. S. (2014). Analysis of pre and post merger and acquisition financial performance of banks in Pakistan. Information Management and Business Review , 6 (4), 177.
Harrison, A. I. B. (2017). The effect of post-merger and acquisition (M&A) integration on customers’ switching behavior (A case study of Fidelity Bank, Ghana) (Doctoral dissertation).
