Best Practices of Mergers and Acquisitions

rivulet head BEST PRACTICES OF MERGERS AND ACQUISITIONS nuclear fusions and Acquisitions scoop out Practices for Success Abstract Mergers and acquisitions make water receive a growing trend for companies to inorganically grow a agate line within its authorityicular industry. There be many goals that companies may be looking to achieve by doing this, barely the main reason is to secure long-term and profitable growth for their crease. Companies have to keep up with a rapidly increasing global market and increased competition.With the struggle for competitory advantage becoming stronger and stronger, it is almost essential to achieve these amalgamations. Through look I will attempt to dissect the stovepipe practices for achieving jointure success. Mergers and Acquisitions Best Practices for Success When companies ar acquired or merged, large number almost immediately lead to way on the differences in the companies. They in any case sire to pay caution to who be t he winners and who are the losers. It is typical in an acquisition for the acquiring bon ton to see itself as the winner, and the acquired guild as the loser.The controlling company wants to claver changes and view those in the acquired company as highly repelant to change. It is clear that most unions and acquisitions are primarily based on strategicalal, financial, or an early(a)(prenominal) objectives. However, ignoring a potential mismatch of citizenry and cultures scum bag lead to strategic and financial failure. In most unions, serious consideration should be aban through with(p)d to cultural and leadership style differences. The success of a optical fusion or acquisition crapper be defined as the creation of synergy. exactly both merger and acquisition is a unique event, occurring in a unique environment that is subject to versatile influences. Analyzing a merger should begin by encountering the culture and core values of the business that is beingness ac quired. Ashkenas, DeMonaco, and Francis (1998) observed that . . . it is increasingly significant that executives pack how to manage the integration of acquisitions as a replicable accomplish and non as a one season entirely event (p. 166). DiGeorgio (2002) has researched this topic extensively through the mergers and acquisitions of lake herring and GE smashing.Cisco bettermentes mergers by . . . (a) doing its home pee-pee to select the overcompensate companies and (b) applying an effective tried and true integration process once the deal is struck(DiGeorgio, 2002, p. 138). Cisco has in the past turned down deals with companies which did not fit within its strategy. Cisco looks at deals from the following perspective (DiGeorgio, 2002) 1. Are our visions basically the same? 2. preserve we produce quick wins for shareholders? 3. Can we produce long-term wins for all quartet constituencies shareholders, nodes, employees, and partners? 4.Is the chemistry right(a)? 5. Fo r large M&A, is in that location geographic propinquity? (p. 138) GE Capital, on the other hand takes a more process-based approach to handling mergers. Since GE has performed plenty of mergers and it learns and grows from each one. The crux of its process is getting the right integration leader which constitutes 95 per cent of the success of an integration (DiGeorgio, 2003, p. 139). This subject field highlights the importance of being proactive in pre-merger provision and offers advice to champion tally that the merger process will be a success.Within this paper, I plan to discuss the best practices companies can use to check over a successful merger. These practices include timely merger preparedness, choosing the right leadership, focusing on corporate culture, communicating effectively, and engaging the staff, human resources, and middle way. Timely Merger Planning There is a lot of time and apparent motion pass on haveing costly merger aspects and courting them p lainly to fall upon through on the follow-up integration activities. As soon as serious discussions begin with a potential merger candidate, the integration planning efforts should begin.It is essential that acquisitions be assimilated into the parent as quickly and as swimmingly as possible to minimize any losses in productivity and maximize opportunities between the both(prenominal) makeups. There is good agreement that the firstly 100 days after a merger change solidifying the tone, signal the troops about the real direction of the organization and its verve(DiGeorgio, 2003,p. 266) A slow integration process can actually worsen problems. Merger integration should not be treated as an after-thought. It is something that inevitably to be addressed uring the merger search and negotiations phase while there is time to minimize any negative impacts. Choosing the Right leadinghip Choosing the right leadership, not only for the merger integrations, but as well as for the ad vanced combine company is all-important(prenominal) in terms of vision, mission, culture, and expectations. A leader should focus on the larger design of the new corporation. A leader has to resist the temptation to take the easy way out. It is not pleasant to retire uncollectible news or to be a naysayer, but it is necessity at times. It is withal important for a leader to promote and project good morale.This starts with treating people with respect and listening to their opinions, rather than telling them what to do. Leaders plenty the tone for the culture and for how relationships are going to unfold in the unite organization (DiGeorgio, 2003, p. 260). Effective on the job(p) relationships and increased trust substantial among the senior executives will carry throughout the organization as a model of how the newly integrated organization will work. Senior executives claim to establish the cultural rules of engagement in the new entity quickly and effectively. smart set leaders should strive to provide as much transparency as possible to decision qualification and address employee concerns much(prenominal) as changes to roles and responsibilities, hire and employee benefits as promptly and practical as can be performed. integration charge is a full-time melodic line and call for to be concur as a distinct business function. . . (Ashkenas et al. , 1998, p. 169). The role of the transition merger leader cannot be taken lightly. This person must make fine personnel, process, and structural decisions quickly.This role requires the mental tenacity to endure long meetings, hoodlum minds, and low morale. The G. E. Pathfinder model as presented by Stopper (1999) suggests that it find an integration leader to direct these merger activities and wash up the necessary results go intoe to have a successful integration. Stopper (1999) also suggests a hardly a(prenominal) other skills and qualifications necessary to look for in this person which i nclude learn in project planning and management, communicating planning and implementation, expertise special(prenominal) to acquisitions, and corporate culture familiarity.Research by Ashkenas (1998), on the other hand, believes a merger leader should have ability to facilitate integration activities, to help the acquired business understand processes of the new company, and to help his or her company understand the business that is being acquired. Leadership also necessitate to be held responsible for the success of the merger (DiGeorgio, 2002). The leader should have a sense of mark and responsibility not only for his or her job but also for the company as well as the employees who work there.When leaders dont exhibit this narrativeability, they can take a nonchalant attitude which can hinder any progress which has been made. Ensuring the becharm leadership is in place from the start will present a successful aim for the outcome of the merger or acquisition. Focusing on Corporate finishing When companies merge there can be a clash of cultures, contradictory beliefs, and different norms. Organizational culture is important because it has been shown to have a portentous impact on organizational performance.Cultures that support the missions, goals, and strategies of an organization provide a means for dealing with change and conflicts when they arise. Cultural integration is ignored in the majority of business combinations (Pekala, 2001, p. 32). Research has shown that because of cultural aspects, mergers a good deal encounter difficulties in achieving the goals of the merger. While due diligence is performed on all of the financial aspects of a merger, one major reason that so many mergers fail is a lack of cultural fit (DiGeorgio, 2003, p. 259).Understanding how things are seen in the other cultures, learning mutual respect, and being return to exploring different points of view are the signalises to the people factor in any merger or acquisit ion. A sound M&A integration strategic plan is as cultural as it is structural and entails both the welding of hard assets and a delicate/neurosurgery of minds (Brahy, 2006, p. 54). Corporate culture tends to be viewed as a company having casual Fridays or working alternate work schedules. However, it runs deeper than the external characteristics.Pekala (2001) suggests that merger partners need to zero in on the basic ways that decisions get made in their companies and how different approaches can be unite in harmony (p. 32). The organizations culture is simply how things are do in the organization. It could be as simple as putting the customer first or driving for excellence in safety. The challenges encountered when merging two different cultures are that either one or the other (or both) needs to change. The issue, past, becomes not just culture awareness, but culture change management (LaMarsh, 2006, p. 9) during the integration period. Building a new culture that combines the best of both previous cultures makes the new organization better, stronger, and more competitive than either of the organizations can be on its own. One way to build a new culture is by having representatives from both companies or organizations list the principles that currently guide its behavior and attitudes. Once this has been captured, both groups can then combine their efforts into a discussion of what type of cultural behavior is necessary to ensure that the best of both worlds is fairly represented.Brahy (2006) even suggest the acquiring company learn another language to help the merging companies feel more at ease and are accepting of their individual culture and traditions. Top management, however, must support this new combined culture. caution cannot force people to work together to build a new culture. As DiGeorgio (2003) notes leaders set the tone for the culture and for how relationships are going to unfold in the combined organization (p. 260). Control over the ne w corporate culture is scathing to the success of a merger.Achieving cultural synergy is possible, but it takes work and effort especially on the side of leadership. communicating Effectively Communication plays a very small role at the time of a merger. Communicating with the employees is very important as they should not feel that they have been unplowed in the dark. It should be remembered that they are the most important assets of an organization and also major stakeholders. Most people understand that mergers and acquisitions take place for business reasons.But it is important to communicate the specific reasons and benefits of the merger. People may not like it, but if they see that it has a legitimate purpose, and the benefits are clear, then there is less resentment and employees are more likely to accept it. Mergers and acquisitions breed uncertainty, ambiguity, and fear among employees. Rumors often begin in organizations before the contract of any impending merger is f ormally announced. . . . Trying to hide bad news such as layoffs by not revealing promote details . . can damage morale and lead to turnover (Messmer, 2006, p. 15). A good communication plan can help avoid complications by ensuring that employees understand the reasons for the deal, the objectives the organization is trying to achieve, and the potential benefits for everyone involved. In mergers and acquisitions, employees typically want answers to the following basic questions ordain I have a job in the new organization? Will my pay, benefits and work locations change? Will this merger be good for my career?These and other questions must be addressed soon after an announcement is made since productivity can suffer the longer employees have uncertainty. Straightforward, concise, and timely communication assists in build employee freight and focuses employees on the day-to-day operations of the organization. . . . Communication minimizes the negative re natural actions of the acq uired employees (Brahma, 2007, p. 8). The fleet employees feel connected to the new organization, the faster they will begin working toward the business objectives and understand what is expected of them.Research shows that organizations using effective communication strategies achieve the best results in productivity and shareholder returns. A good communication strategy is critical to a successful merger or acquisition. A successful plan cannot be reactive but proactive and it has to be included as part of the original merger plans. Nikandrou, Papaleaxandris, and Bourantas (2000) curse that frequent communication does not imply that management should communicate every little detail of the process . . . t rather means that management communicates its concerns about employees . . . (p. 336). An effective communication plan must take into account many elements such as the unique needs of various stakeholders, such as managers, employees, investors, customers, suppliers, and surrou nding communities, need to be identified and addressed. Successful mergers only happen when upper managers make themselves visible and accessible to all employees touch by the merger. All employees need to experience the buy-in and support of their leaders for the merger or acquisition.Leaders need to be prepared to communicate the answers they do have and be open to stating what answers they do not have further (Terranova, 2006). For leaders and managers to maintain credibility and trust with employees, they must be open and honest in dealing with these problems rather than choosing not to communicate at all. Engaging Staff and Middle Management People issues are often the most sensitive but also overlooked aspects of mergers and acquisitions. Organizations fail to envision that people have the capability to make or break the deal.It is important for organizations to address the viability of the integration on the human resources front. There are key resources within the organiz ation that can help in handling people issues namely the employees, human resources, and middle management. Frequently there are a lot of people who get overlooked in the acquisition process specifically lower-level employees who may be able to offer valuable input. They are the people who produce the profits, represent the company, and, ultimately, are the ones that will make the combined company succeed.Proactively engaging the employees can cultivate change agents for the acquisition making the entire process more desirable for all parties involved. Managing change is a systematic process that requires moving through a series of action steps to predict and address the risk caused by potential unsusceptibility (LaMarsh, 2006, p. 59). The best way for leadership to actively involve employees is to engage in active feedback sessions. This could involve setting up meetings with key people from various groups in the organizations and soliciting feedback from them (Messmer, 2006).Anot her suggestion could be to set up a website answer board where employees can ask the integration team or top management questions anonymously and view answers to other questions that have been proposed. Retaining and motivation employees is a major challenge for the human resource department of organizations. actively engaging human resources early in the process can ensure merger success. gracious resource leaders can play a key role in helping senior management identify, involve, and measure the key executives and other critical talent who will be alert for the success of the new business. charitable resources can help facilitate employee question and answer meetings and are the most knowledgeable about current policies and procedures. sympathetic resource skills are essential for the facilitation and negotiation processes regarding combining pay and benefits. Human Resource skills are also needed for supporting, counseling, and coaching line managers, who have to supervise th eir functions during very difficult times. Middle management also plays an important role in ensuring the success of a merger or acquisition. communications with the middle managers will help to not only alm their fears and concerns but also help them understand what is in store for them. If middle managers are not kept in the tuition loop, it can lead to false information getting out that could damage morale as well as increase turnover. They need to fully understand the benefits not only to the organization but also to them as individuals. Once concerns have been dealt with, middle managers should be held accountable for implementation of the change. Without this accountability, they ultimately will not have a desire to change their behavior.Middle managers should become a positive part of the change process and they should not feel as if it is another political platform or process that is being forced upon them. Middle managers are the leaders that lower-level employees will lo ok to for timely, accurate information. If approval of the merger is outflown at this level, then those under them will more than likely not give their approval either. Conclusion Several important lessons have been learned from the merger research conducted throughout this paper.When a merging with another company, managers should be pore on uniting the two companies as quickly as possible. Management should also be aware of the importance of starting the integration planning as soon as a definitive merger candidate is determined. Another important aspect of the merger process is a commitment to change on the part of leadership. Management needs to assign appropriate leadership resources to complete the transition successfully. Communication is also very critical even when there is nothing new to say. It is impossible to over-communicate throughout the merger process.Employees have an almost insatiable desire for information, and misinterpretation of silence and rumors are very c ommon. Mergers are seen as a way to solve problems but it also creates a new set of problems as well as opportunities. Success in mergers and acquisitions rests not only on good strategic and financial planning, but also in the analysis of people issues. make mergers work successfully is a complicated process which involves not only combining two organizations together but also integrating the people of two organizations with different cultures, attitudes, and mindsets.To ensure success in mergers and acquisitions there needs to be timely merger planning, the right leadership, cultural integration, effective communication, and the engagement of staff and middle management. References Ashkenas, R. , DeMonaco, L. , & Francis, S. (1998). Making the Deal Real How GE Capital Integrates Acquisitions. Harvard Business Review, 76(1), 165-178. Badrtalei, J. , & Bates, D. (2007). Effect of Organizational Cultures on Mergers and Acquisitions The Case of Daimler Chrysler. 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