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Learning gets respect…
Merger & Acquisition (M&A)VS.
Business Culture
Based on web-site reading ( articles/presentations)
Learning gets respect…
Takeover The transfer of control from one ownership group to
another.
Acquisition The purchase of one firm by another
Merger The combination of two firms into a new legal entity A new company is created Both sets of shareholders have to approve the transaction.
Amalgamation A genuine merger in which both sets of shareholders must
approve the transaction Requires a fairness opinion by an independent expert on
the true value of the firm’s shares when a public minority exists
Definitions
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The Business Culture comprises of : values, rules & policies, goals and measures , rewards and
recognition, staffing & selection, training & development,
Ceremonies and event, leadership behavior, communication and physical environment.
In short it is “the way the company does business”.
Definitions (Cont.)
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Nice /Friendly Acquisition
It is the acquisition of a target company that is willing to be taken over.Usually, the target will accommodate overtures and provide access to confidential information to facilitate the scoping and due diligence processes.
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Difficult/Hostile Acquisition
It is a takeover in which the target has no desire to be acquired and actively rebuffs the acquirer and refuses to provide any confidential information, and does not cooperate for a successful takeover.
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1. On workers or employees: - layoffs
2. On top level management: - clash of egos - variation in culture
3. On shareholders: a) Of acquiring firm : most affected, they are harmed by the
same degree to which target firm shareholders benefitted b) Of target firm : benefitted the most, acquiring company
usually pays a little excess than what it should
Merger & Acquisition impact
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A global A.T.Kearney study suggests that 58 % of all mergers, acquisitions, and other forms of corporate restructuring fail to produce results rather than create value.
Similarly, a KPMG survey found that 83 % of mergers were unsuccessful in producing any business benefits regards shareholder value.
A major McKinsey & Company study found that 61% of acquisition programs were failures because the acquisition strategies did not earn a sufficient return (cost of capital) on the funds invested".
Between 55% and 77% of all mergers fail to deliver on the financial promise announced when the merger was initiated.
Even though most mergers and acquisitions are carefully designed, they still face major challenges. Nearly two-thirds of companies lose market share in the first quarter after a merger; by the third quarter, the figure is 90 %. In the first four to eight months that follow the deal, productivity may be reduced by up to 50 %.
M&A Failures- % .
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Top 3 major reasons as seen by CEOs - %
Major reasons for M&A failure
61%
66%
67%
Business Cultural conflicts
Inability to realize synergies
Poor Integration Process
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1. The Human Factor ,
2. The Business Cultural “Misfit” &
3. The Process
What/who is really behind it?
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Poor integration
process
Inability to realize
synergies
Business Cultural
conflicts
• Plan in place / clear goals / accountability
• Continually enhance process
• Make the “tough” decisions, don’t delay
• Start integration planning early
• Drive towards common processes and platforms
• Strong integration process
• Give authority / expect accountability
• Respect different ideas and new approaches
• Seek to understand and learn how to manage
• No “Us & Them”; only “We”
Issues Mitigation
Issues and Mitigation
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The company should
1. Recruit and promote service oriented candidates,2. Train the workforce in techniques of service3. Set goals that are based on service4. Reward an recognize people for higher level of service5. Other actions.
Promote the Business culture
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Communication Common Business Culture Training and Development Mutual understanding and respect Individual counseling
Business Culture HR wise
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Making the merger / acquisition work successfully is not that easy as here we are not only just putting the two organizations together but also integrating people of two organizations with different cultures, attitudes and mindsets.
While making the merger / acquisition deals, it is necessary not only to make analysis of the financial aspects of the acquiring firm but
also the cultural and people issues of both the concerns for proper post- acquisition integration
Conclusion
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Thank you and good luck…