Question

Describe the evidence that Mergers do not typically increase economic welfare.?

Answer 1

Problems of integration: it can be difficult to integrate two different corporate cultures.
Difficulty in establishing a working relationship: it may be difficult to build a working relationship due to different management styles.Inability to achieve synergies: The synergies anticipated can never be achieved and will ultimately reduce the overall benefit. Bureaucratic controls: if the horizontal merger creates a corporation that can be called a monopoly, there may be legal repercussions. Horizontal fusions are scrutinized in the United States because the combination of competitors will create a monopoly and boost consumer prices

A larger business can become a market monopoly and then it can raise the prices of goods / suppliers that are not good for the consumer.
Another downside of a merger could be difficult to communicate and organize between various cultures ' employees.
Because consolidated company shareholders want a bonus to go through on their shares for a merger, it could be a very expensive affair.

Merger could be a very important part of any business strategy such as market share growth or cost reduction. With the changing market, keeping innovating either organically or inorganically is very necessary for a company. If a company carefully merges a business that can complement its plan and execute it beautifully for inorganic development, then this marriage will ripen sweet fruit for them.