Integration Planning for Merger of Two Consulting Engineering Firms

Abstract

Over the past several years there has been rapid growth in the marketplace for geosciences, geoenvironmental, and related engineering services. This trend is expected to continue well into the 1990s and perhaps beyond. In order to capitalize on resultant business opportunities, mergers and acquisitions have become an increasingly common means of meeting the new challenges of this marketplace. While there is no single data source that precisely documents the success rates of typical merger activity, most studies indicate that merger success rates are less than 50%, and some studies suggest that 70% of all mergers end in failure. This study reviews both premerger considerations and postmerger activities that are important to facilitate a successful merger. The premerger analysis provides an overview of preacquisition evaluating considerations. For a firm wishing to expand through merger, it is critically important to thoroughly evaluate itself (particularly its management capacity) prior to pursuing acquisition candidates. Postmerger integration focuses on ways to create and promote synergism, both internally through operations and externally within the marketplace. The extent to which firms are able to generate synergism is typically the difference between success and failure.