Structuring Mergers And Acquisitions
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Abstract
This Paper is geared to guide business professionals through an M&A. In this Study the multiple organizational factors impacting on a merger as well as those processes being impacted on throughout the merger process will be examined. First the examination of the current corporate culture and its effects on employees when two companies merge is analyzed, while illuminating the realities of the new culture. An exploration of change in general is examined, as well as the reaction of employees (resistance) to these changes will be set forth.
Most merger and acquisition strategies are still dominated by financial analyses, legal considerations and power plays by dominant groups as individuals jockey for position and influence. Rather than focusing on the inherent dysfunctions that can emerge in the combined organization due to the informal power held by organizational members — low productivity, poor quality, reduced commitment, voluntary turnover, and related hidden costs and untapped potential — far too many companies seem to meander through the post-combination integration.
Mergers and Acquisitions (M&A’s) are becoming a strategy of choice for organizations attempting to maintain a competitive advantage. Corporations spend billions of dollars annually in pursuit of this strategy; the success rate, however, is less than commendable. Research offers a number of potential determinants for this success rate. Receiving increased attention and research organization culture is one factor identified as a potential catalyst to a M&A success. This Article reviews related literature to identify some underlying reasons why organizational culture is one of the important factors in regard to the success rate of Mergers and Acquisitions.
The article concludes with the process of Managing and Strategy throughout the phases. Furthermore, the five major sections (communications, corporate culture, change, stress, and managing/strategy) are sub-divided into three sub-sections: pre-merger; during the merger; post merger. These sub-sections will further aid managers and CEOs distinguish the important issues facing employees at each juncture of the M&A process.
Bibliography
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Barney, J.B. (1997), Gaining and Sustaining Competitive Advantage, Addison-Wesley, Reading, MA.
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British Institute of Management (1986), “The management of acquisitions and mergers, Discussion Paper No. 8, Economics Department, September.
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Cartwright, S. and Cooper, C.L (1993), “The Role of culture compatibility in successful organization”, The Academy of Management Executive, Vol.7 No.2 pp. 57-69.
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Cartwright, S. and Cooper, C.L. (1993a), “The psychological impact of merger and acquisition on the individual: a study of building society managers,