Merger & Acquisition Challenges in the Oil and Gas Sector

Goals

To identify some of the biggest challenges that large oil and gas companies face when merging their operations and support services in order to reduce overhead expenses as well as duplicative service functions.

Early Findings

Staff Retention

  • Sometimes, as a way of trying to reduce overhead costs after merging, companies might be forced to down-size.
  • Other than the problem of having to let go of some employees, determining how to retain the best talent and making sure that they remain confident in their job security so that they do not leave is a huge challenge.
  • In most cases, when two large companies merge, employees start to feel threatened by the changes in roles, strategies, management, and leadership. This becomes problematic because it can lead to a huge loss of workers which can eventually affect the revenue of the business.

Maintaining Stability

  • Since the two organizations' cultures are yet to become one, sending the right message while still respecting the presence of the existing cultures can be a challenge that leads to a lack of stability.
  • Additionally, if the acquirer imposes the takeover, mismatches can occur and cause uncertainties.
  • For instance, if the acquirer forces the use of new software and IT systems, the company might fail to effectively execute its operations.


Proposed next steps:

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As the initial research only touched on some of the general challenges of mergers and acquisition across all industries, we recommend continuing the research to specifically focus on the challenges large companies in the gas and oil sectors face. We will identify 2-3 challenges oil and gas companies face when merging their operations and support services into a single organization as well as explain how and why they are considred challenging.
We also recommend continuing with research to provide 2-3 best practices that oil and gas companies can implement to make merging operations and support services into a single organization successfull. For each best practice identified, we will describe the practice, explain why it is a best practice, and provide an example of a company that is using the best practice if available.