WHY MERGER?
Without mergers and acquisitions, many of the most well-known brands and companies would not be where they are today. Some merged companies are so successful we can’t remember a time when the two were distinct. Where would Disney be without Pixar, or J.P. Morgan without Chase?
At the same time, the history of mergers and acquisitions has had its fair share of failures. It’s sometimes shocking to discover why one company has suddenly disappeared after being acquired and run into the ground by another. Some of the most famous mergers are those that have lost billions, left executives plagued by their failures and even caused companies to go bankrupt.
Companies generally see for mergers when they have grown enough organically and they want to accelerate their pace of growth. Organic growth generally takes time and energy. According to BOG Report on Microfinance, in 2016 alone there was a marginal of 1.9% in total assets to GHS 1.3 billion compared to 30.3% in 2015. Leading MFIs have healthy balance sheets and strong net worth. Banks also lend to these larger MFIs without much hesitation. The current supply of micro-credit is very low. This translates into a huge scope for growth for the big players.
If the big microfinance companies want to maintain the extraordinary rates at which they continue to grow, inorganic growth is very essential. “The consolidation process of the Ghanaian microfinance institutions may begin very soon, and may become a norm in one to three years from now. Consolidation would become necessary for MFIs which are large in size, while those smaller MFIs work at the grass roots level and hold the key to engage the borrowers. Here, the big MFIs would prefer to take over the district and semi-urban MFIs to get access. The challenges I foresee in the issue of mergers, is that can two struggling institutions merge and make strides? Is the typical Ghanaian owner willing to merge its business and loose some level of control? These are issues we need to address moving forward so that we can together share ideas and look at the way forward to save our industry and instill a higher level of confidence. I believe writing pieces like this is one of the sure way to help address these difficulties.
Read Full Research Here
Author: KWASI KYERE
CHIEF EXECUTIVE OFFICER;
STAR ALLIANCE MICROFINANCE LIMITED
ACCRA.
PHONE; 0302-631635, 0209345895
kyerekwasi@yahoo.co.uk
