If you are merging with another company or even merging a two business units in your company, I’d there a risk suppliers or distributors may increase prices since they know you’d probably be getting some revenue synergies..if not risk of higher prices, are there any other risks with suppliers/distributor in the case of a merger?
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Supplier/distributor risk
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Hello!
I would say it’s usually the other way around (have a look at any internet post that describes Porter’s Five Forces). Usually the consolidated entity has higher purchasing power, since they buy more.
Hope it helps!
Cheers,
Clara
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Hi there,
Not at all - this isn't how it works!
You now have buyer power. Your business means a lot more to the suppliers/distributors. They will do a lot more to get your business, including offering discounts (you are buying in more bulk now).
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Its the other way around. Most of the time the merged entity actually gets lower prices from the suppliers since the order quantities increase.
Supplier risks in mergers are related to vendor consolidation. The whole process of going through with the procurement merger is painful. Some contracts need to be renegotiated, some need to be cancelled, some need to be played out till their end before synergies can be realized etc. etc.
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