When ABC ltd merged with XYZ Ltd, little did they know that the managers and directors would be suddenly deprived of authority leading to bitterness amongst each other. It was observed that the managers of both the companies had personality clashes on a regular basis. This proved to be a major problem, slowing down or preventing integration of the entities. From the case study above
identify the reason for failure of merger between the two companies.
identify the reason for failure of merger between the two companies.
Answer & explanation
Correct answer: option 1
Boardroom split :When a merger is planned, it is crucial to evaluate the composition of the boardroom and compatibility of the directors. Managers or directors who are suddenly deprived of
authority can be particularly bitter. Specific personality clashes between executives in the
two companies are also very common. This may prove to be a major problem, slowing
down or preventing integration of the entities.