Merger and Acuisition

Topics: Mergers and acquisitions, Due diligence, Transition companies Pages: 31 (10385 words) Published: March 16, 2013


European Management Journal Vol. 19, No. 3, pp. 239–253, 2001  2001 Elsevier Science Ltd. All rights reserved Printed in Great Britain S0263-2373(01)00021-4 0263-2373/01 $20.00 + 0.00

HR Issues and Activities in Mergers and Acquisitions
RANDALL SCHULER, Rutgers University, New Jersey SUSAN JACKSON, Rutgers University, New Jersey Mergers and acquisitions are increasingly being used by firms to strengthen and maintain their position in the market place. They are seen by many as a relatively fast and efficient way to expand into new markets and incorporate new technologies. Yet their success is by no means assured. To the contrary, a majority fall short of their stated goals and objectives. While some failure can be explained by financial and market factors, a substantial number can be traced to neglected human resource issues and activities. Numerous studies confirm the need for firms to systematically address a variety of human resource issues and activities in their merger and acquisition activities. This article proposes a three-stage model of mergers and acquisitions that systematically identifies several human resource issues and activities. Numerous examples are offered to illustrate the issues and activities in each of the three stages. The article concludes with a description of the role and importance of the HR department and leader.  2001 Elsevier Science Ltd. All rights reserved. Keywords: Mergers, Acquisitions, Human resource issues, Strategic alliances ute more efficiently, while other firms focus on their own internal growth, leadership and development. Regardless of industry, however, it appears that it has become all but impossible in our global environment for firms to compete with others without growing and expanding through deals that result in mergers or acquisitions (Lucenko, 2000; Galpin and Hemdon, 1999; Deogun and Scannell, 1998, 2001). The deals between many of the largest and most successful global firms such as Daimler–Chrysler, Chase–J.P. Morgan, McKinsey–Envision, UBS–Paine Webber, Credit Sussie–DLJ, Celltech–Medeva, SKB– Glaxo, NationsBank–Bank of America, AOL–Time ´ Warner, Pfizer–Warner Lambert, Nestle–Purina, Deutsche Telekom–Voice Stream and GE–Honeywell attest to this belief (Seriver, 2001; Fairlamb, 2000a; Lowry, 2000; Tierney and Green, 2000; Vlasic and Stertz, 2000a; Timmons, 2000; McLean, 2000; Ewing, 2000a,b,c; Barrett, 2000a; Silverman, 2001; Tompkins, 2001). And the future appears to be ripe for a continuation of the trend for annual increases in merger and acquisition (M&A) activity: I personally see more consolidation: more partnerships, more strategic alliances, and more acquisitions. Jac Nasser, CEO, Ford Motor (Taylor, 2000)

Companies today need to be fast growing, efficient, profitable, flexible, adaptable, future-ready and have a dominant market position. Without these qualities, firms believe that it is virtually impossible to be competitive in today’s global economy. In some industries such as insurance or banking, firms may move into new markets. In others such as pharmaceuticals or software technology, firms may work with smaller firms that have developed or are developing new products that they can manufacture and/or distribEuropean Management Journal Vol. 19, No. 3, pp. 239–253, 2001

And why not? The factors that have driven the M&A activity in the past decade are forecast only to intensify: need for large economies of scale, deregulation, globalization, expanding markets, risk spreading, and need for rapid response to market conditions. Even in a tough financial environment and a declining stock market in 2000, the value of global mergers and acquisition exceeded $3.5 billion for the first time (Taylor, 2001). As a consequence of these realities, companies have become better at doing deals. Several have trained staff who can facilitate mergers and acquisitions 239


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