Cott Corp., a business that produces soft drinks, is acquiring DSS Group Inc. through a $1.25 billion (US) deal. DSS is a water and coffee distributor within the U.S., with over 2,000 customers. While Cott’s shares have risen ‘10.27%’ on the Toronto Stock Exchange, there are underlying problems that may arise through a business acquisition that this article does not highlight.
On average, 50% of business acquisitions lead to failure because of the risks and complexities associated with it. Hence, sustaining the performance management of a business during an acquisition is essential. Cultural differences may arise between the two different companies. Some employees may be more motivated by power and their position within the company, while others may be more motivated by accomplishments. This difference, may create a segregation between the company after a business acquisition. To overcome this challenge, Cott Corp. should reward the performance of their employees and give out stocks. This sets up a rewards system within Cott Corp., which should effectively improve the productivity of their employees. For example, when a certain percentage of stocks are given to employees, they become more invested into the company. The amount of work they put into the company would determine they amount of dividend they could have from the stocks. Hence, the work productivity of employees would increase and they would become more committed to their job. Furthermore, this rewards system does not cost anything for Cott Corp.
Although the external financial data of Cott Corp. is currently improving due to the business acquisition deal, it is imperative for Cott Corp. to also consider the future internal operations management it may face after the business acquisition. The success rate for a business acquisition is not favourable, but considering and planning solutions to problems that may be faced could increase the success rate for Cott Corp.
Website and image source:
http://www.theglobeandmail.com/report-on-business/beverage-maker-cott-acquires-us-firm-in-125-billion-deal/article21473792/
http://www.forbes.com/sites/robertsher/2012/06/22/12-signs-that-an-acquisition-will-crater/