Question 2: Discuss the factors in post-merger integration process ?

Answer: Some important factors that can contribute to success or failure in mergers and acquisitions are : Due Diligence : Lack of due diligence has caused many merger failures. It involvescomprehensive analysis of firm characteristics such as financial condition,management capabilities, physical assets and intangible assets. Financing : Manageable debt levels should be ensured. Complementary Resources : Occurs when the primary resources of the acquiring andtarget firms are somewhat different, yet simultaneously supportive of one another.This tends to create economic value to a greater value that exists when the mergingfirms have identical or unrelated resources. Friendly/Hostile Acquisitions : Friendly acquisitions tend to create greater economicvalue. A hostile acquisition can reduce the transfer of information during due diligenceand merger integration, and increase turnover of key executives in the firm beingacquired. Synergy Creation : Four foundations to creation of synergy are strategic fit,organizational fit, managerial actions and value creation. Organizational Learning : Many people should participate in the acquisition process toensure knowledge about acquisitions is being spread throughout the firm, and isnt lostif one of the key people typically involved leaves. The learning process should bemanaged, with steps taken to study and learn from acquisitions, with the informationgained recorded. Focus on Core Business : Cultural and management differences are more greatlymagnified the less firms have in common, therefore constraining the sharing ofresources and capabilities. Result is that positive benefits from financial synergy arenot enough to offset the negative effects of diversification.; Emphasis on Innovation : Innovation is critical to organizational competitiveness.Companies that innovate enjoy the first-mover advantages of acquiring a deepknowledge of new markets and developing strong relationships with key stakeholders in those markets. Ethical Concerns/Opportunism : Risk in mergers and acquisitions are that the information received may be incorrect, misleading or deceptive. Steps should be taken to ensure that the information is accurate and hasnt been manipulated by management with the aim to making performance appear higher than it is.