Mergers can ensure the Survival of a Company

Bigger corporates, private equity firms and even small or medium sized businesses often consider merging their business activities for better revenue, structured management and increased profit margin. However, mergers are usually carried out by firms that have similar business interest. In other words rarely would one hear of a merger between a healthcare company and a software firm, unless the software firm has been developing products for pharmacies. Moreover, mergers by big corporates are carried out to consolidate ones position in the industry. Mergers are more commonly seen amongst software firms, banks and financial institutes.

In a recent interview Rob Joubran, COO of Platinum Equity opines that mergers often ensure the survival of a company in the industry. Even though contemporary industry theorists offer opinions to opposite, Joubran believes that mergers can often breathe new life into a sick industry. The joint revenue, structured management and better employee handling can help secure the future of a company, which otherwise might even have become bankrupt. According to Joubran mergers are like the classic example of a single twig and a bunch of twigs. If a company find it difficult to survive on its own it is better to consolidate its position be integrating itself with another firm.

According to Joubran some of the benefits of mergers are as follows:

• Better revenue flow: With the combined revenue of the two or more firms, the merged companies with now have an increased funding. This subsequently, will ensure better investment in business activities, thereby consolidating the position of the companies better.
• Merger by a private equity investment firm: Joubran believes that companies like Platinum Equity carry out an important business activity by assisting in the mergers of fragmented companies, sick industries and financially weak firms. Mergers by Platinum Equity ensures better flow of funds, professional management and complete employee satisfaction.
• Mergers to be sold off at a profit: Many private equity firms assist in mergers in order to earn greater profit and then sell the company. However, Joubran opines that the process is not that simple. After a merger the equity firm has to invest heavily in the business activities of the integrated company. Only when the equity firm is satisfied with the working of the consolidated company, does it consider selling it at a profit.

Thus, the objective of a merger is to ensure the survival of not just one company, but all the participants in the consolidation.

Rob Joubran with his years of experience and degree from University of Michigan has made a name for himself as a business strategist. As a COO for Platinum Equity Joubran has personally overseen and carried out many acquisitions and mergers. Hence, he insists that the perception of the industry towards mergers have undergone a change in the recent times and evidently so. With the latest economic upheavals mergers have definitely materialised into successful business ventures designed to ensure the survival of companies in a highly competitive scenario.