The post liberalization period was of mergers and acquisitions and still it is continuing as a strategic driver for market dominance, geographical expansion, leverage in resource and capability acquisition, competence, adjusting to competition. M&As are strategic alliances. People Management plays a critical role in M&A. People [pic]issues like staffing decision, organizational design, etc., are most sensitive [pic]issues in case of M&A negotiations, but it has been found that these [pic]issues are often being overlooked. The ability to succeed in a merger depends entirely on the people who are driving the business - whether they have creativity, capacity to innovate and ability to execute, and more importantly, whether they can do these things collaboratively. To ease the [pic]merger transition and make sure the pieces fit together as seamlessly as possible, the HR should take the initiatives in management, recruitment, structure, retention, and managing cultural change. In a [pic]merger, the employees should be put in a position to see easily that there was value in their daily work lives. It is more important for the employees to be able to say that they understand why this is happening. To achieve this understanding in the employees, the company's HR executive minimize their conventional functions as administrators and payroll experts in favor of more proactive roles as coaches and profit consultants. M&As are strategic alliances. In a [pic]merger, two companies join together and create new entity. In an acquisition, one company acquires sufficient shares to gain control of the other organization.
Strategic Drivers of M&A
Companies merge in order to gain economies of scale and control over distribution channel. 2.Geographical Expansion
Companies use acquisitions to extend geographical reach and global market share through new market entry. 3.Leveraging Competence
Companies merge to leverage their competence in NPD, credit risk and debt management, etc. 4.Resource & Capability Acquisition
Companies also merge to gain resource and capability acquisition, which they may lack, and would otherwise be difficult for them to build on their own. 5. Adjusting to Competition
Companies are sometimes forced into acquisitions by the acquisition strategy of their principal competitors.
Phases of Merger
There are three phases of merger: -
Run-up or Pre-Merger
Used to develop an awareness of the likely challenges and pressure points. Generally, the companies concentrate only on the strategic aspects and legal issues during the pre-M&A planning period. Human issues like staffing decisions, organizational design, etc., take a back seat. It is essential to plan and manage these issues at pre-takeover planning period. Immediate Transition (first 100 days or 6 months)
Different team is used to manage this.
Appointment of new board of directors and key appointments and redundancies. Effective hand-over is essential between teams.
The Integration (Long-term coming together of the two parties) When the deal has been closed, the job of realizing the strategic and value creation objective of the deal starts. Companies involved in the merger have to be integrated in varying degrees. | |
Extent of integration is defined by the need to maintain the separateness of the acquired business. It involves integration of the following: - * Systems
* Processes and procedures
* Reporting systems
Involves re-distribution of power between the merging firms. Conflict of interests may hinder an effective integration process. HR Issues & their Implications on Various Stages of M&A
Stage 1: Pre Combination - The HR issues in the pre merger phase are: - *Identifying reasons for the M&A
*Forming M&A team leader
*Searching for potential partners
*Selecting a partner
*Planning for managing the process of...