• Objectives:
– Understand what mergers and acquisitions are
– Understand why they occur
– Understand the key issues involved
– Discuss the role of HR in integrating multiple organizations
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• A merger is when one company is combined with and totally absorbs another
• An acquisition is the process used to transfer assets from one company to another
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• Acquisition is a generic term to communicate transfer of ownership
– You can do an acquisition followed by a merger
– You can do an acquisition by means of a merger
– You can do an acquisition in which no merger occurs
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• To create added value by:
– Enhancing the strategic capability of both firms
– Improving the competitive position of either or both
– Leveraging existing capabilities, products, markets, and management practices
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• Hart-Scott-Rodino Antitrust Improvement
Act of 1976
• U.S. Department of Justice
• Federal Trade Commission (FTC)
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• Market Segment
• Companies Within Market Segments
• Potential Combinations
– Within market segments
– Across market segments
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• Rescue
– Response to a raid or financial bail-out
• Partnership
– Both parties actively desire the combination
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• Adversarial
– Only one firm has a strong interest in the deal
• Hostile Takeover
– Acquisition target actively resists the take-over
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• Usually a result of major weaknesses in operations or management of one company
• Cooperation tends to be high
• Completion of audits often rushed
• Significant issues not dealt with during the negotiations
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• Goodwill and respect prevail
• Management retention packages and agreements to keep key talent is critical
• Surprises are rare
• Once the financial deal is done, management often ignores integration details
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• Negotiations are aggressive
• Resistance is extreme
• “Us versus them” atmosphere prevails
• Consolidations, layoffs and closures surface
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• Animosity toward the raider is generated
• Substantial residue of ill-will remains during the integration
• Strong win-lose atmosphere prevails
• Talents leaves first
• Human resource failures most likely in this type of M&A
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• Profits
• Assets and stocks
• Customer and vendor base
• Facilities
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• Cost of FTC compliance
• Replacement of key talent that leaves
• Productivity drop-off
• Loss of competitive position
• Customer attrition
• Power struggles and cultural differences
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• Integrate policies and programs from both companies
• Process retention, compensation and benefits packages
• Identify key talents and expertise
• Advise leadership on organization capability
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• Recognize customs, symbols, language and ceremonies needed for cultural assimilation
• Design new performance and reward systems
• Create communication strategies
• Educate organization on what to expect and on new skills
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• Success Case Study
– Star-Excel Building Corp.
• Failure Case Study
– Great Southern Railroad
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• Five integration phases:
– Due Diligence
– Organize
– Mobilize
– Implement
– Perform
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• Stages of Resistance
– Betrayal
– Denial
– Identifying Crises
– Search for Solutions
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• Planning the integration
– Completed templates as examples of content you would expect to see
– Blank templates to be completed using the information in the Success Case Study for input
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