Unity Bank

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UNITY BANK: REALIZING VALUE FROM AN M&A INTEGRATION

EXECUTIVE SUMMARY
• • • Oct-Nov 2006: Smaller company acquires a market leader June 2007: major integration: systems & operations Unity’s integration goals: • Save $60 million worth of IT expenses within 3 years on staff and infrastructure • Wants to be the world’s #1 provider of share registry services • Maximize shareholder wealth CIO, Stuart Irving worries: • Lack of due diligence because of legal problems • Hart Scott Rodino Act prevented proper communications • Unknown bugs within Delta’s operations might affect the integration’s timeline & budgetary goals • Present a short and efficient integration to the investors



OVERVIEW
UNITY Strengths • • Very efficient technologically Professional and experienced staff members Good incentives, innovative projects: keeps staff motivated and stimulated Remarkable ability to attract talented professionals Family oriented work environment • • Weaknesses Small player in US market Difficulty hiring entry level programmers because BLAIR uses COBOL • Strengths Delta has more clients and is a bigger brand in the US LEADER: uses object-oriented programming language • • • DELTA Weaknesses Technological challenges Limited capabilities Duplication of resources due to systems’ limitations Failed integrations in the past Clients can’t view portfolio of investments





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PROBLEM STATEMENT
A. Determine the enterprise platform? B. Staff motivation issues C. Create a new organizational structure? D. Attract star performers? E. Start building the infrastructure for the new organization?

DISCUSSION OF KEY ISSUES
A. Determining the enterprise platform
Delta has 4 different systems Clients/Employees on different systems No consistency in user experience Leader: Delta’s attempt to consolidate all of its systems Unity has one system: BLAIR Written in COBOL (hard to find employees/training costs) Issue: What is the best way to integrate the two organizations? Clients can’t view their investments as a portfolio Clients experience differences in services because of the different systems Inefficient Staff and infrastructure is costly/Creates wasted resources

A. Determining the enterprise platform

SCENARIO 1: US Demand increases

SCENARIO 2: Stock decreases because of previous integration failures NEGATIVE:
Integration is too timely to show investors that it’s a successful integration

SCENARIO 3: Increase in Delta star-performer resignation
POSITIVE:
Easier to hire entry level programmers, develop new features and customize system

SCENARIO 4: US Demand Decreases

ALTERNATIVE 1: Upgrade Leader to BLAIR’s capabilities: $45 million

POSITIVE:
Ability to easily hire entry level programmers.

NEGATIVE:
Less funds to test and develop Leader. Taking a risk of using a new system with remaining users.

NEGATIVE:
Leader hasn’t been tested in the field

ALTERNATIVE 2: Use BLAIR to provide services under Delta’s brand

POSITIVE:
BLAIR has been tested in the field and proved to be efficient

POSITIVE:
The use of BLAIR will shorten the integration time.

NO EFFECT

NEGATIVE:
BLAIR is proven to be inefficient in US market

NEGATIVE:
Difficulty hiring entry level programmers and developing new features.

ALTERNATIVE 3: Keep both systems temporarily

POSITITVE:
Both systems are tested in their fields and employees are experienced NEGATIVE: Costly. Inefficient.

NEGATIVE:
The goal of the acquisition is not achieved

POSITIVE:
Allow Unity to retain star performers and evaluate them further

NEGATIVE:
Less funds to maintain both systems and infrastructures

DISCUSSION OF KEY ISSUES
B. Delta’s staff - motivation issues
Staff is not unified No effective communication Lack of information flow from Delta to Unity Decreased team work Feeling of “Unity vs. Delta” among employees Fence sitters Skeptical about new management’s promises Fear of uncertainty

DISCUSSION OF...
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