The Additive Manufacturing industry is shaken by numerus Mergers and acquisitions (M&A) activities that aim to change its landscape for the coming years. Before we dive specifically to possible consequence and implications of such mergers, let’s examine the strategic and operational challenges associated with M&A:
Cultural Integration: When two organizations merge, they often have different corporate cultures, values, and ways of operating. Integrating these cultures and ensuring alignment can be challenging, as it may lead to conflicts, employee resistance, and decreased productivity.
Synergy realization: One of the main objectives of M&A is to achieve synergies, such as cost savings, increased market share, or complementary capabilities. However, realizing these synergies can be complex and time-consuming. It requires integrating systems, processes, and teams, and may involve redundant staff layoffs, reorganization, and standardization efforts.
Financial and Legal complexities: M&A transactions involve intricate financial and legal processes. Valuing the target company accurately, negotiating terms, assessing financial risks, conducting due diligence, and navigating regulatory and compliance requirements can be demanding and time-sensitive. Failure to address these complexities adequately can lead to financial losses or legal issues.
Employee Retention and Talent Management: During mergers, employees from both organizations may experience uncertainty and anxiety about their roles and job security. Retaining key talent and managing workforce integration is crucial for the success of the merger. Failure to address employee concerns and effectively manage talent can result in talent attrition and a loss of critical knowledge and skills.
Customer and Supplier Relationships: M&A activities can disrupt customer and supplier relationships. Customers may be concerned about changes in product quality, service levels, or pricing. Suppliers may reassess their relationships, leading to disruptions in the supply chain. It is essential to proactively communicate with stakeholders, address concerns, and ensure the continuity of business relationships.
The challenges of the exciting options
The ultimate goal of merging two leading AM companies is accelerating the growth of the entire industry, and the adoption of AM in manufacturing processes. Any merger between the current players will create a larger company that will face the following three main challenges:
A very wide product portfolio with numerous technologies
A large network of sales partners with many overlaps
Confusion among customers for the short-medium term
Furthermore, setting the right go-to-market strategy of such a corporation will require adopting a new approach, as it will target a boarder spectrum of markets and applications.
The ideal path for success?
Another option that might be relevant now or in the future is a buyout of one of the existing players by a large conglomerate, not necessarily from the industry itself. Such a move by a well-established company with a long and successful history, and vast experience is scaling businesses, might be a better option for the longer term.
Such a move was done last year by Nikon that decided to acquire SLM Solutions, a provider of metal AM solutions for pure manufacturing applications. This will be an interesting benchmark to follow..