They cannot count on the IPO to provide them with personal resources. In a merger, however, it is possible to structure a transfer that will guarantee a business owner at least some return on his investment. Rolling out a new product to successfully compete with a known brand is more difficult than simply purchasing the brand. Mergers can also be a good way to decrease your competition-if you can't beat them, buy them. Many companies, some of which were formed exactly for that purpose, are hoping to be acquired, but there aren't nearly as many buyers.
Mergers are expensive and time-consuming, too.
Before a merger can pay off, companies must successfully resolve complicated issues including tax and legal challenges, and problems blending corporate cultures. Half the merged entities never achieve their projected financial and market goals. Because mergers cost so much and come with such high expectations for short-term profits, the owner of a company acquired in a merger may find his or her job with the new company less than solid. A merger may mean short-term cash, but not necessarily future stability. With mergers all the rage, regulators are increasingly wary of mergers that may create monopolies.