These days, there is considerable discussion surrounding acquisitions and mergers aimed at forming larger corporate entities and institutions. I acknowledge the significance of this trend, particularly when powerful entities come together, pooling their strengths. This synergy has been a catalyst for success in many countries that embarked on a journey of growth and self-improvement.
In the rapidly changing and dynamic business environment of today, numerous companies in Bahrain are consistently exploring strategies for expansion. Among the strategies gaining traction in recent years is the adoption of “mergers and acquisitions.” The rationale behind this trend lies in the fact that, by combining resources, expertise, and market access, mergers and acquisitions serve as a means for companies to attain accelerated growth.
I would like to highlight some examples from our beloved Kingdom of Bahrain, underscoring the trend of mergers and acquisitions. Notable instances include Kuwait Finance House’s acquisition of Ahli Bank, Al Salam Bank’s acquisition of Kuwait Finance House – Bahrain, BENEFIT Company’s acquisition of Bahrain FinTech Bay, Solidarity Group Bahrain’s acquisition of Al Hilal Life and its subsidiary Al Hilal Takaful, along with the announcement by BBK and NBB expressing their intention to initiate discussions for a merger.
These initiatives are commendable and should be supported and facilitated. It is crucial to recognise that the concept of mergers should extend beyond the banking sector. Mergers and acquisitions should be seen as imperative for the regulation of various industries and service companies across a wide range of sectors. Mergers between major factories and larger service companies can empower entities to become stronger, more effective, and more productive.
The positive implications of these developments on the national economy are evident. They foster sustainable investments and lay the groundwork for a comprehensive system of programmes and innovations across several sectors to address future challenges.
A confluence of global and regional factors has contributed significantly to the bustling activity in the M&A market, both locally in Bahrain and on a global scale. Among those to watch are the rise of economic and technological globalisation, the surge in global competition, and the conducive economic laws and legislations.
It is only natural that such mergers or acquisitions will impact the interests of some employees. These business entities are expected to undergo restructuring into new entities, resulting in a temporary impact, in my opinion. However, it is imperative for institutions to approach personnel matters arising from acquisitions and mergers with fairness. Applying fair and transparent policies to address the concerns of affected workers ensure that they receive their full rights.
It is not surprising that some leaders within institutions may resist the idea of a merger, fearing a potential reduction in their authority. However, the reality is quite the opposite. Mergers have the potential to fortify institutions. They enhance their readiness to expand their business, customer base, and partnerships. Embracing the notion of a merger necessitates a robust will and strategic vision that transcends personal interests and prioritises the collective welfare of the institution and the entire sector.
Nevertheless, we do not advocate for institutions to embark on mergers and acquisitions blindly. It is the right of the institution’s owner to be well-informed about the consequences. Research and meticulous planning serve as the cornerstone for any successful merger. Companies can confidently navigate the intricate landscape of mergers through financial due diligence, by assessing cultural compatibility, evaluating market synergies, and formulating a comprehensive integration strategy. This approach will unlock the full potential of the combined entity.
Looking ahead, we hope to witness mergers among factories and SMEs. Collaborations like these will empower them to adapt to evolving market dynamics, thereby creating larger and more competitive business entities. Such endeavors are undeniably poised to drive future growth and positively shape the national economy.