The Impact of Customers, Competitors during M&A

The influence of customers on the efficacy of mergers and acquisitions (M&As) is profound, as their responses can directly affect organizational performance and long-term financial results. Analyzing customer sentiment and behavior during and subsequent to a merger is imperative.

Customer Satisfaction and Firm Value

•M&As frequently result in diminished customer satisfaction, which can adversely affect firm value [1].

•Striking a balance between customer satisfaction and operational efficiency is vital for long-term performance after a merger [2].

Customer Behavior and Market Dynamics

•Transformations within organizations during M&As can drive customers to move to alternative vendors [3].

•Competitors may take advantage of customer uncertainty by striving to seize market share during the phase of merger announcement [3].

Sources:

[1] Nita, Umashankar., S., Cem, Bahadir., Sundar, G., Bharadwaj. (2021). 1. Despite Efficiencies, Mergers and Acquisitions Reduce Firm Value by Hurting Customer Satisfaction:. Journal of Marketing,  doi: 10.1177/00222429211024255

[2] Vanitha, Swaminathan., Christopher, Groening., Vikas, Mittal., Felipe, Thomaz. (2014). 3. How Achieving the Dual Goal of Customer Satisfaction and Efficiency in Mergers Affects a Firm’s Long-Term Financial Performance. Journal of Service Research,  doi: 10.1177/1094670513510196

[3] David, T., Bastien. (1994). 2. A Feedback Loop Model of Postmerger Performance Customers and Competitors. Management Communication Quarterly,  doi: 10.1177/0893318994008001003

This relates to my new book “Automation of Mergers and Acquisitions“.