Increased market share Fortune Fortune

SynergiesI won't name names, but I know a company that calls itself by one name but has never stopped being a collection of remnant companies from the glory days of the Reagan-era. The amount of redundancy inherent in that organization is a huge challenge, but there's little that can be done. They tried and failed. Merging company names is one thing but merging cultures is something entirely different. We still have a deep seated need for identity and we will do whatever is necessary to preserve it. Thus, in today's age of modernity, we still have corporations whose divisions use two different accounting systems and whose corporate real estate operations can never be centralized without causing a riot.

SavingsIf two entities merge that are geographically dispersed, with little or no historical overlap in the scope or strategic direction of their business, then I can agree to the concept of purely merger-related savings and greater efficiencies. However, if two competitors merge, and each is in the other's sandbox to begin with, the merger was never one of creating synergies but one of eliminating a threat. In this scenario, savings can only come from one source--staffing…and by that I mean a reduction thereof.

Customer ServiceBigger begets bigger and the entity that feels it the most is the consumer. Think of all the Hollywood hopefuls that promised to never forget their supporters in Nebraska as they headed west. Once they hit the big time, they never looked back and in some cases even pretended not to recognize their old friends when they showed up starry-eyed at the Hollywood premier. Now, think of any large firm--healthcare, telecommunications, banking, etc. Truth is, as consumers we all know that if we want personalized service, we have to go to an independent or smaller firm. That's why we, in our personal lives, have our favorite restaurant, cleaners, banker, hairdresser, etc.

What this all boils down to is that for all the talk of happy co-existence, recent and future real estate industry mergers will rely on abdication. The merged entity is the one that ultimately has to submit to the will of the buying entity. That's easier said than done. Corporations are resilient to preserve their identities, cultures, direction and people and unless one firm literally disappears from the face of the earth, there's a long road ahead. The way I look at it, one car has been removed and for me, the highway just got wider.

Vik Bangia is managing director, strategic services for the corporate solutions group of United Properties in

Instant Insights /

Mergers and Abdication

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