2. What Are Mergers & Acquisitions?
• When one company takes over another and clearly
established itself as the new owner – acquisition
• acquiring firm retains its identity, while the acquired firm
ceases to exist.
• when a larger, more powerful, and richer organization takes
over another organization – hostile takeover
• when two companies, more or less on equal footing, decide
to join forces – “merger of equals”
• both parties accepting risk and sharing in the potential
4. Major HRM Issues in Mergers &
Research shows that consistently 65% of mergers and
acquisitions that fail do so because of people issues
Requires a focus on one new vision and one new
Problems occur when the larger or stronger of two
organizations tries to significantly influence the
1. Lack of Communication
2. Lack of Training
3. Loss of Key People
4. Corporate Culture Clash & Power Politics
5. Employee Resistance
5. Cultural issues in mergers and
business world seems littered with integrated companies
that have lost value for shareholders
"What forces are powerful enough to counteract
the value-creating energy of economies of scale or
global market presence?"
Culture-dominant barriers to effective integrations
culture - found to be the cause of 30 per cent of
6. What does this mean for
integrating two companies?
CULTURE AFFECTS RESULTING IN
Decision-making style (for example: •Effective integration requires rapid decision-making.
consensus contrasted with top-down) •Different decision-making styles can lead to slow
decision-making, failure to make decisions, or failure to
Leadership style (for example: dictatorial or •A shift in leadership style can generate turnover among
consultative, clear or diffuse) employees who object to the change. This is especially
true for top talent, who are usually the most mobile
•Loss of top talent can quickly undermine value in an
integration by draining intellectual capital and market
Ability to change (willingness to risk new •Unwillingness to implement new strategies.
things, compared with focus on maintaining •Unwillingness to work through the inevitable
current state and meeting current goals) difficulties in creating a
7. How people work together (for example: •Merged companies will create interfaces between
based on formal structure and role definitions functions that come from each legacy company, or new
or based on informal relationships) functions that integrate people from both legacy
companies. If the cultural assumptions of the legacy
companies are inconsistent, then processes and handoffs
may break down with each company's employees
becoming frustrated by
their colleagues' failure to understand or even recognize
how work should be done.
Beliefs regarding personal "success" •Again, these differences can lead to breakdowns in
(for example: organizations that focus on getting work done. If people who believe they have to
individual "stars," or on teamwork, or where achieve goals as a team integrate with people whose
people rise through connections with senior notion of "success" emphasizes individual performance,
practitioners) the resulting situation is often characterized by personal
dislike and lack of support for getting the job done.
8. In the pre-merger phase, successfully planning
and initiating an M&A deal requires a sound
strategy and a deep understanding of
operational, financial, legal, tax, and cultural
These are necessary to truly understand the fit
and the value of prospective targets.
Comprehensive valuation and negotiation skills
are required to close a favorable deal.
9. M&A strategy:
In the pre-merger phase, we start by defining
ambitious growth and portfolio strategies and
identifying attractive M&A targets with a strong
Based on an initial outside-in analysis and
industry benchmarks, we assess the target's
potential for generating value and help come up
with a preliminary price.
10. Due diligence and deal preparations:
Accordingly, commercial due diligence and
synergy analysis are two of our core strengths
within the M&A lifecycle.
Furthermore, we work together with attorneys,
auditors, and tax advisors to form a complete
target profile. Our goal is to ensure that our
clients do not pay more than the target is worth.
11. To realize the best possible deal, we work with our
clients and their attorneys to devise sound negotiating
We assist in jump-starting the integration and value
capture by installing "clean teams" for advanced data
analysis, & by realizing quick wins with arm's-length
contracts prior to closing.
12. CROSS BORDER MERGERS
The cross-border merger is a transaction in which the assets and
operation of two firms belonging to or registered in two different
countries are combined to establish a new legal entity.
STEPS INVOLVED IN THE PROCESS OF CROSS BORDER
Common draft terms of cross border merger.
Merger report of the management.
Independent expert report.
Share holders’ approval.
Registration of the company
company’s full name, registered number, registered office
address, legal form and law by which the company is governed,
and name of the member state, and the name and address of the
registry where company documents are filed.
13. Benefits of cross border mergers:
Dissolution without liquidation.
Consequences of cross border
Loss of autonomy.
Dominance of monopoly.
14. BEST PRACTICES
Strategic focus on growth objectives
Early cross functional-integration planning
Involvement of HR in due diligence
15. POST ACQUISITION
Start planning early
Develop Clear, Coherent and Timely
Get an Insider’s View of Knowledge Networks
and Information Flow
Dedicate Adequate Resources to the Transition