Effect of Merger on Employees

Topics: Mergers and acquisitions Pages: 4 (1097 words) Published: November 14, 2011

Apoorv Choudhary


There are contrasting views on the impact of mergers and acquisitions on employees. Many times field level and management level employees react differently to a merger.

Mergers are a form of consolidation where two or three companies merge and the identity of only the largest company remain intact and the smaller companies losses their identity. MERGER-
The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of the stock of the merging company. In a merger existing stockholders of both companies involved retain a shared interest in the new corporation. The decisions are usually mutual between both the firms.

Greenwood et al. (1994) define,
“A merger involves a blend of two companies, rather than mere legal enjoinment or absorption of one firm into another”. Kithinji and Waweru (2007) describe merger as a process in which one of the two companies loses its identity to make a one firm.

A merger can be of any of the following kind:-
* Horizontal merger –Companies in direct competition merger for consolidation. * Vertical merger – Merger of a company with its supplier or vice-versa. * Market-extension merger - Two companies that sell the same products in different markets. * Product-extension merger - Two companies selling different but related products in the same market. * Conglomeration – Merger of companies which totally differ in their business areas.


Organizations are built and show their performance by the human resource and thus, it is important to find out the impact of merger on the employees. A merger brings a major change in organisation and its policies, its revenue, brand value and more importantly on the internal customers i.e. the employees. That’s why it is necessary to focus the effects of merger on the human resource....
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