Knotted forever By AmitPande&Sandeep K Krishnan In an ideal merger, the newly created entity pools the best features of the

two merging organizations. A well planned process built on the foundations of an open, honest and consistent communication strategy can pave the way. Mergers and acquisitions have become a common phenomenon in recent times. A merger of the size like HP-Compaq has implications for the workforce of these companies across the globe. Although the merging entities give a great deal of importance to financial matters and the outcomes, HR issues are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the desired outcomes due to people related issues. The uncertainty brought out by poorly managed HR issues in mergers and acquisitions have been the major reason for these failures. The human resource issues in the mergers and acquisitions (M&A) can be classified in two phases the pre-merger phase and the post merger phase. Literature provides ample evidence of difference in between the human resource activities in the two stages: the pre-acquisition and post acquisition period. Due diligence is important in the first phase while integration issues take the front seat in the later. The pre acquisition period involves an assessment of the cultural and organizational differences, which will include the organizational cultures, role of leaders in the organization, life cycle of the organization, and the management styles. The mergers often prove to be traumatic for the employees of acquired firms; the impact can range from anger to depression. The usual impact is high turnover, decrease in the morale, motivation, productivity leading to merger failure. The other issues in the M&A activity are the changes in the HR policies, downsizing, layoffs, survivor syndromes, stress on the workers, information system issues etc. The human resource system issues that become important in M&A activity are human resource planning, compensation selection and turnover, performance appraisal system, employee development and employee relations. M&A activity presents a different set of challenge for the human resource managers in both acquiring and acquired organizations. The M&A activity is found to have serious impact on the performance of the employees during the period of transition. The M&A leads to stress on the employee, which is caused by the differences in human resource practices, uncertainty in the environment, cultural differences, and differences in organizational structure and changes in the managerial styles.

The organizational culture plays an important role during mergers and acquisitions as the organizational practices, managerial styles and structures to a large extent are determined by the organizational culture. Each organization has a different set of beliefs and value systems, which may clash owing to the M&A activity. The exposure to a new culture during the M&A leads to a psychological state called culture shock. The employees not only need to abandon their own culture, values and belief but also have to accept an entirely different culture. This exposure challenges the old organizational value system and practices leading to stress among the employees. Research has found that dissimilar cultures

can produce feeling of hostility and significant discomfort which can lower the commitment and cooperation on the part of the employees. In case of cultural clash, one of the cultures that is dominant culture may get preference in the organization causing frustration and feelings of loss for the other set of employees. The employees of non-dominating culture may also get feelings of loss of identity associated with the acquired firm. In certain cases like acquisition of a lesser known or less profitable organization by a better one can lead to feelings of superiority complex among the employees of the acquiring organization. In case of hostility in the environment the employees of two organizations may develop us versus them attitude which may be detrimental to the organizational growth. The uncertainty during the M&A activity divert the focus of employees from productive work to issues like job security, changes in designation, career path, working in new departments and fear of working with new teams. The M&A activity leads to duplication of certain departments, hence the excess manpower at times needs to be downsized hence the first set of thoughts that occur in the minds of employees are related to security of their jobs. The M&A activity also causes changes in their well defined career paths and future opportunities in the organization. Some employees also have to be relocated or assigned new jobs; hence the employees find themselves in a completely different situation with changes in job profiles and work teams. This may have an impact on the performance of the employees. Research has found that at least two hours of productive work per employee per man day is lost during the M&A activity in the organizations. The increased political processes that may be underway in the organizations to sustain the importance of the various individuals and departments will add to the confusion. The human resource systems vary across organizations owing to the differences in the organizational culture, sectoral differences and national cultural differences. For example if the compensation in the acquired firm is lesser compared to the acquiring firm, the acquisition will raise employee expectations (for the employees of acquired firm) of a possible hike in compensation which may not be realistic. On the other hand if the compensation level of employees in acquiring firm is lower the employees may press to have equal compensation across all the divisions of the firm. The pay differential can act as a de-motivator for the employees of acquiring firm and may have long term consequences. The compensation issues may also involve legal angle. Two cases in the Indian context are important which underline the importance of legal issues related to compensation in M&A activity. The first case involving Hindustan Lever Limited acquiring TOMCO, the employees in TOMCO enjoyed better terms and services compared to the HLL employees. The HLL employees argued that if TOMCO employees are allowed to work on their original terms and conditions, two classes of employees will come in existence. Since both the set of employees now belong to same firm, a case of discrimination will arise against the employees of HLL. However the court supported TOMCO employees in the process. The second case involves merger of Glaxo and Wellcome-Burroughs who decided to merge in 1996. The Indian arms however couldn t merge in the last seven years because of high pay differential between workers of Glaxo and Wellcome in India. The workers of Wellcome were offered a one

timecompensation of Rs. 2 lakhs in 1998, which they refused. Further the VRS scheme launched by the firm evoked very tepid response.

Since 1997 the firms have been working as independent subsidiaries in India. Compensation differences need to be rectified by the acquiring firm so as to maintain the morale of acquired firm employees and to retain them. The compensation structure among the organizations may also differ creating troubles, for example one of the firms may have performance based pay while other may have higher component of fixed pay. Hence the differences in compensation structure and performance appraisal systems also need to be rectified so as to bring equity in the human resource systems and to treat employees at the equal level. Another practical problem is differences in the grading or organizational structures in the systems. Since the organizational structures are different designations for the employees are used, during the integration of acquired organization the acquiring organizations need to develop a mechanism to remove the differences in the grading systems bring them at equal level, as many a times the compensation is related to the grade of employee in the organization. The employee relations issues gain more importance in the acquisitions of manufacturing units in India. The power equation between management and trade unions is bound to change with the acquisition. The acquiring management also needs to keep track of number of unions in the workplace and equations between them as many Indian manufacturing units have multiple unions. Hence comprehensive analysis of trade unions operating in the plant should be done. This will require study of management-union equation, employee contracts, political linkages of the unions, compensation related clauses, number of trade union and dynamics between the unions. The impact on the employees can be divided into categories of psychological trauma, increased workload, survivor guilt and stress. The reaction of the employees can vary from anger to dejection and depression. The process of merger can have inbuilt psychological and social threats which should be identified like exodus of managers due to the perceived job insecurity. There is also fall in the morale, commitment and loyalty. The merger can lead to depression and impaired performance. The dissimilarity in the cultures can produce the feelings of hostility and significant discomfort, which impact on the commitment and cooperation on the part of employees. The cultural difference also leads to counterculture feelings where employees tend to completely reject the dominant culture of the organization. The impact of cultural shock is significant and long lasting on the employees. The initial shock is followed by employees making their own perceptions based on values and past experiences. The more dissimilar the culture is higher will be the cultural shock. The likely reactions as noted by studies are anger fear, denial frustration and depression which leads to altered behavior, reduced productivity, stress, illness, accidents , conflicts and a total lack of commitment to make merger work. The feeling of political back stabbing adds to the psychological trauma. Kids Corner and Kamala

Although Kamala was not a partner in Kids Corner . She is on leave for almost a week and had discussed this issue with her colleagues and family. The inclusion of Kids Corner would help then to get a good group of students in the entry level classes of their high school too. She had four teachers working under her and other three office staffs. As the professor explained how some of the major mergers turned out to be acquisitions with the bigger and stronger company trying to take full control. She brought out the options before her Whether to continue with Kids Corner . However things changed a lot since then. . She was impressed with the way that Vidhya group discussed various issues with her. They also guaranteed her the post of Principal once the group takes over the Kids Corner. she knows best to do it further. As a principal she was vested with the responsibility of taking any decision which affected the organization. Vidhya group managed many educational institutions from high schools to engineering colleges. Kamala thought that there is a major dent in the freedom she had in running the organization. Some of the teachers left the organization feeling uncomfortable with the new management and their style of functioning. They wanted the salary to be cut to almost half. The revenues which were collected as fees from the kids were used to fund the salary and other running expenses of the nursery. The parents of the kids were also involved in the take over negotiations. which Kamala was unaware of. Kamala initiated the process of merging Kids Corner with Vidhya group. Kamala was worried about her destiny in the organization. Kamala is working as a Principal in a nursery school which takes care of about 100 students. He took some of the major decisions regarding the running of the organization. The Vidhya Group and the parents were of the opinion that since she managed the institute till now. Kamala also thought this as an opportunity to grow and increase the visibility of Kids Corner. The ownership of Kids Corner was taken over by the Vidhya Group. With this Kamala thought that she was cheated by the Vidhya group. The way the new management dealt with Kamala also changed a lot. A new person was appointed as the manager of Kids Corner. She was in a complete dilemma and has now started thinking of the options she had before her. Lots of ambiguity crept in regarding the fate of Kids Corner. she could not just let herself free from the experiences she was having for the past 6 months. The partners of Kids Corner were running the organization as a service to the society. Kamala was sidelined in some of the major decisions which were taken regarding the running of Kids Corner. As she was listening to a lecture on people issues in mergers and acquisitions. After the session. However they didn t have professionally managed preschool in their portfolio. Kamala represented Kids Corner in all the major negotiations with the Vidhya Group. join another organization which may give a comparable salary and job profile or fight it out with the new management. The events unfolded as follows. Vidhya group was interested in taking over Kids Corner which was the nursery managed by Kamala. she had a chat with the professor and narrated the experience she is undergoing. She was further shocked when the new management informed her that the salary that she is drawing now is too high for the organization to afford. she was given a lot of freedom and authority in running the organization.Kamala who was in her early forties was quite puzzled with what is happening with her career.

the best strategy in this period is to convince the employees that they are part of new organization and their concerns will be taken care of. the differences that may exist in practices. feeling of distrust and rumors will be creating havoc in the life of employees. In case of lengthy transition period the employee stress increases. The result as we have seen in the case may be employees leaving the company or drop in productivity due to apathy towards work and the management. The group meetings seem to help because many-a-times employees are reluctant to come out and speak their concerns. Managing M & A Clearly defined communication strategy during M&A plays an important role in removing the employee fears and kill rumors floating around in the organization. This will make the integration process easier for the acquiring organization. the mystery about the future. The employees meeting in small groups so as to discuss their concerns. The organizations need to reach their employees before the press as the employees will have feelings of getting cheated. Improved communication will help to better understand each other s cultures and practices. HR takes control Train managers on the nature of change Technical retraining Family assistance programs Stress reduction program . Firms can also use this period to analyze the human capital of the acquired firm and define their possible roles in the new organizations. The transition period also becomes crucial from communication point of view. building an atmosphere of mutual trust. Involving other employees who are trusted by the employees for instance trade union leaders are also helpful. fears and positive feelings also helps to lessen the stress on employees of acquired firm. The transition period provides ample opportunity to design the new organization. plan synergies and train the employees as the new role. It is important to understand a merger will be the case of managing a number of employees like Kamala and this should be a well planned process.In the case of Kamala. whereas in groups where everyone shares same set of feelings to an extent. If organizations of large size merge. This also provides confidence to employees that the new management is willing to listen to their concerns and feelings. The transition period can also be used to improve communication with the employees of acquired firm. Studies show that communication strategy that involves senior managers of the acquired organizations work well. we can see how the confusion after merger affects the professional life. explain the new roles to the employees. it becomes easier to come out with the common set of concerns and fears.

assignment of roles etc are done at this stage. A team of executives from the GE Capital and the acquiring company is formed. . The needed resources are pooled and accountability is ensured. The pre-aquisition phase of the model involves due diligence. The model is dynamic in the sense that company constantly improves it through internal discussions between the teams that share their experiences. The communication can be through trusted and credible employees of the acquired company and trade unions can be involved in the process too. This is also the period when the organization actual starts reaping the benefits of the acquisition. The communication should be sufficient enough to answer the queries and worries of the employees. The processes like assessing the work flow. The second phase is the foundation building. This stage also involves continuous feedbacks and making necessary corrections in the implementation. This stage involves long term adjustment and looking for avenues for improving the integration. The last phase involves assimilation process where integration efforts are reassessed. Acquisition strategy of GE Capital The GE Capital uses a successful model called Pathfinder for acquiring firms. Also a 100 day communication strategy is evolved and the senior management involvement and support is made clear. devising communication strategies and evaluation of strengths and weaknesses of the business leaders.Meeting between the counter parts Orientation programs Explaining new roles Helping people who lost jobs Post merger team building Anonymous feedback helpline for employees The communication aspect being very important should be handled carefully by the human resource department. An integration manager is also chosen at this stage. The four stages incorporate some of the best practices for optimum results. effective tools and refine best practices. This involves the cultural assessments. this will help to lessen their worries related to job security. providing any piece of information which is unreal can lead to rumors and counteract. The communication should provide precise information to the employees. The third is the integration phase. At this phase the integration plan is prepared. negotiations and closing of deals. Here the actual implementation and correction measures are taken. The first set of information should be related to their future jobs. The communication shouldn t involve false promises which may counteract later. The model disintegrates the process of M&A into four categories which are further divided into subcategories.

Rumours often begin in organizations before the announcement of any impending deal is formally made. R. This involved.ernet. and Francis. The company insists on no layoffs and job security is guaranteed to all the employees of the acquired company. ICFAI Center for management research) In an ideal merger. They may be contacted at sandeepk@iimahd. Harvard Business Review. the objectives the organization is trying to achieve and the potential benefits for everyone involved. the technology systems and the relationship style with the employees. If this is lacking in the working style of the target company. L. employees of the acquired firm are given 30 days orientation training to fit into the new organizational environment. Once the acquisition team is convinced.in Bringing People Together: Communication In Mergers & Acquisitions Mergers and Acquisitions breed uncertainty. . geographical proximity etc. The planned process of communication and integration has resulted in high rate of success in acquisitions for Cisco. 1 Acquisition strategy of Cisco The acquisition strategy of Cisco is an excellent example of how thorough planning can help in successful acquisitions.N. No forced acquisitions are done and the critical element is in convincing the various stakeholders of the target company about the future benefits. A top level integration team visits the target company and gives clear cut information regarding Cisco and the future roles of the employees of the acquired firm. Cisco looked whether there is compatibility in terms of long term goals of the organization. After experiencing some failures in acquiring companies.Making the Deal Real: How GE Capital Integrates Acquisitions. the newly created entity pools the best features of the two merging organizations. 76 Issue 1. p165. Cisco is not convinced about the acquisition. After the acquisition. work culture.Source: Ashkensas. (1998). An internal communication plan helps avoid these complications by ensuring that employees understand the reasons for the deal. The acquisition team of Cisco evaluates the working style of the management of the target company. (The case is adapted from Cisco s acquisition strategy . Jan/Feb98. In the evaluation process.. analyzing the benefits of acquiring. DeMonaco. Sandeep K Krishnan and AmitPande are students. Personnel and Industrial Relations area of the Indian Institute of Management. S. the caliber of the employees.in and amitp@iimahd. honest and consistent communication strategy can pave the way. an integration strategy is rolled out. For example Cisco believes in an organizational culture which is risk taking and adventurous.ernet. Vol. Cisco devised a three step process of acquisition. A well planned process built on the foundations of an open. Ahmedabad. ambiguity and fear amongst employees. understanding how the two organizations will fit together how the employees from the organization can match with Cisco culture and then the integration process. Fellow Programme in Management.J.C.

Even though legal and structural amalgamation is completed. communication messages will assume different nuances. corporate Web sites and town hall meetings so people can feel they are part of the process . and surrounding communities. it has to be integral to the business plan. a special team of executives and managers is created as part of the merger or acquisition process with a communication cell formed to ensure that frequent and accurate messages are disseminated from the responsible managers on an ongoing basis. Resistance to change most often occurs when people do not know what is going on. such as managers. Stakeholders have to be informed as to who will be making decisions and when. Moreover. the plan cannot be reactive. To be efficient. benefits and working conditions change? Will they be better or worse? Will this merger be good for me from a career perspective? These and other questions must be addressed within a matter of weeks of the announcement. the importance of communication to a successful integration process cannot be overstated. e-mail. employees. Once the preliminary decisions are made to form a merger. focus groups. the faster they will begin working toward the business objectives and understand what is expected of them. Follow-through is a critical facet of the plan after the formal merger or acquisition agreements have been implemented. as productivity can suffer the longer employee questions go unanswered. straightforward. A good communication strategy and execution is critical to a successful merger or acquisition. understood and addressed. concise and timely communication assists in building employee commitment and focuses employees on the day-to-day operations of the organization. Taking a proactive approach is an effective means for defusing erroneous information or misinformation created by the grapevine to fill an information vacuum. Communication Planning Research shows that organizations using effective communication strategies achieve the best results in productivity and shareholder returns. Comprehensive. investors. surveys and information sessions should be arranged with two purposes in mind: to solicit people s views about the merger and to respond to their concerns. that is to contribute to the success of the business objective. The faster employees feel connected to the new organization and their work unit. special communiqués. suppliers and distributors.In mergers and acquisitions. An effective communication plan must take into account many diverse elements: y y y y The unique needs of various stakeholders. depending on whether the audience comprises individuals from the acquirer or the acquiree organizations. usually . Normally. Information needs and issues must be monitored and dealt with throughout the integration process.not on the receiving end of decisions. Systems for two-way communication are established through newsletters. employees typically seek answers to the following key questions: y y y y Will I have a job in the new organization? Where do I fit? What am I supposed to do? Will my pay. need to be identified. Each stakeholder group will want to know how the merger will affect them.1 Likewise. customers.

The trust that exists between leaders and their workforce is a fragile creature . For leaders and managers to maintain credibility and trust with employees. and high-touch media. offering opportunities for input. Leaders will need to be prepared to communicate the answers they do have and be open to stating what answers they do not have as yet. senior leaders need to model the expected behaviours in the organization.synchronizing ³say´ and ³do´ is important to maintain credibility. As well. The objectives of an internal communication plan should be to: y y y y y y y prepare people for their new roles within the organization. The articulation of a strong vision for the future must come from the top and cannot be delegated. and ensure that messages are consistent and aligned with the integration objectives and any external communication initiatives. successful organizational communication requires that leaders spend a substantial amount of time communicating speaking with and listening to employees. Mergers often mean that tough issues and messages need to be faced and explained in the organization. The communication process has to continue to inform people about changes to policies. By recognizing and reinforcing progress. support employees in accepting and dealing with a significant number of changes. communication can be time intensive. When communicating with employees. facilitate the flow of information by listening to employees. model the new way of working in the organization. an additional effort is required. involving employees when possible. Nevertheless. Leadership Responsibility The visibility of leadership and the role of managers in the communication process are essential. Technology plays a supporting role in the communication process by providing the means and opportunity for consistent and timely information to all stakeholder groups. Leaders and managers should be equipped to handle the changes in the organization and communicate with employees and other stakeholders. For leaders.is to get the information to employees using the right mix of several communication channels simultaneously. . such as team meetings with managers. they must be candid in dealing with these problems rather than choosing not to communicate at all. understand the new employment deal being offered by the company. Success in meeting milestones must be celebrated along the road to integration. and giving feedback in a timely fashion. The right balance between high-tech. that helps to shape the desired culture. such as intranets and the Internet. must be applied so that the messages and information are conveyed in the best way possible. What is important . while not overloading people with information.the human and cultural blending takes a lot longer. make sense out of the many initiatives and how they fit together. employee and stakeholder motivation and commitment are enhanced.and frequently very tricky . procedures and practices.

especially managers and employees with critical skills. Managers need to be trained as effective communicators. but it is in the company¶s best interest to engage critical talent early and aggressively involve them in the integration process. honest. Good people always have options. Key Talent Involvement Often overlooked in a merger is the creation of specific communication directed at key talent.The messages sent through leaders¶ actions have the strongest impact on creating the new culture in the organization and creating the behaviours expected from employees. depicts four phases of the communication process during the integration effort of a merger and acquisition event. The Four-Phase Communication Process The accompanying Figure 1below. They have to not only work through the changes in the organization themselves. but also support their employees in successfully coping with the transition. Employees expect to hear critical information from their bosses as well as from newsletters. set the right tone and be active listeners. Web sites and human resources representatives. These individuals need to know they are valued and important to the organization as the merger or acquisition moves forward. Tools and support mechanisms have to be available for managers to help them in this role. Managers need to be open.2 . Managers in front line work units are vital to the communication process because employees turn to them for information.

ROLE OF HUMAN RESOURCES IN MERGERS AND ACQUISITIONS . A balanced. aligning employees and stakeholders with the organization¶s business goals will result in a more successful integration. Organizations should avoid the common pitfalls of dedicating too few resources to communication and focusing most of those on external communication. resources need to be dedicated to an intensive process. These efforts help people view the merger or acquisition as an essential ingredient to future business success. Some constants. are paramount. however. integrated communications approach. to achieve ³all of this effective communication´. The most important one is management¶s support. Another is the commitment to keep people informed about how the proposed changes will fit with the organization¶s values and strategic focus. The communication process evolves as the integration effort takes shape.Clearly.

acquire.Saturday. Collaborating or sharing expertise may obtain gains in efficiency. One firm can acquire yet another in numerous other ways. a change in management could make the organization much more profitable. State law sets the procedures for the approval of mergers and establishes judicial oversight for the terms of mergers to make certain shareholders of the target business. There are a number of reasons why a corporation will merge with. such as buying the majority of a company¶s stock or all of its assets. Courts tend to be sceptical of defences if the management of a target organization has already decided to sell the organization or to bring about a change of control. most states permit directors at target organizations to defend against acquisitions. Normally. Sometimes. the vast majority of mergers and acquisitions are friendly. corporations can produce goods or services a lot more efficiently if they combine their efforts and facilities. or a organization may have underutilized assets. Also. A majority vote of shareholders is generally needed to approve a merger. including buying some or all of the company¶s assets or buying up its outstanding shares of stock. Other reasons for acquisitions have to do a lot more with hubris and power. Regulation of Mergers and Acquisitions: Mergers and acquisitions are governed by both state and federal laws. negotiated transactions. The term ³acquisition´ is normally used when one organization takes control of yet another. May 7. The acquiring firm retains its identity. A merger occurs when 1 firm assumes all the assets and all the liabilities of another. Motives behind M&A . state law tends to be deferential to defences as long as the target firm is not acting primarily to preserve its own positions. receive fair value. Since of the fear that mergers will negatively affect employees or other company stakeholders. A merger is just 1 sort of acquisition. Factors for Mergers and Acquisitions: The management of an acquiring business may be motivated more by the desire to manage ever-larger organizations than by any feasible gains in efficiency. Because of the number of state defences now accessible. This can happen through a merger or a number of other methods. 2011 5:43 Posted in category Federal Judicial Selection Comments Off ROLE OF HUMAN RESOURCES IN MERGERS AND ACQUISITIONS Introduction: A merger is a mixture of two organizations to form a new organization. even though the acquired firm ceases to exist. even though an acquisition is the buy of 1 firm by another with no new company being formed. or be acquired by an additional corporation. the other company can better use.

manager¶s compensation. A lot more specifically. Occasionally investors will get new stock identifying a new corporate entity that is developed by the M&A deal. taxes. folks issues in just the integration phase of mergers and acquisitions contain: (1) Retention of key talent. they begin with a tender give. cross selling. geographical or other diversification and resource transfer. the target firm can do one of several things Accept the Terms of the Offer. financial. But executives who have been by way of the merger procedure now recognize that in today¶s economy. The Human Side of M&A Activity A lot of attention is paid to the legal. . stock or both. Men and women problems happen at a number of phases or stages of M&A activity. The procedure typically begins with the acquiring firm carefully and discreetly buying up shares in the target organization. When the deal is closed. the management of the human side of change is the real key to maximizing the value of a deal. Closing the Deal Finally. the merger deal will be executed by means of some transaction. empire building. manager¶s hubris. The Target¶s Response Once the tender give has been made. In a merger in which 1 firm buys one more. Attempt to Negotiate. the acquiring company will pay for the target company¶s shares with cash. bootstrapping and vertical integration Mergers and Acquisitions: Doing the deal Begin with an Give When the CEO and top managers of a organization determine that they want to do a merger or acquisition. even so. once the target company agrees to the tender supply and regulatory requirements are met.i) The following motives are considered to add shareholder value: Economies of scale. or building a position. increased revenue / increased marketplace share. ii) The following motives are considered to not add shareholder value: Diversification. based upon the failure rates of M&As. appears to be a somewhat neglected focus of the top management¶s attention. Execute a Poison Pill or Some Other Hostile Takeover Defence. synergy. investors generally obtain a new stock in their portfolios the acquiring company¶s expanded stock. overextension. and operational elements of mergers and acquisitions. The management of the human side of M&A activity.

8. Advising top management on the merged company¶s new organizational structure Overseeing the communications Managing the learning processes Re-casting the HR department itself Identifying and embracing new roles for the HR leader . HR issues in 3 Stage Models of Mergers and Acquisitions The three stages: (1) Pre-combination. 4. 7. 2. 6. 5. and (4) Integration of corporate cultures. Selected HR Issues in the three Stages of M&A Stage 1: Pre-Mixture Identifying factors for the IM &A Forming IM & A team/leader Searching for possible partners Selecting a partner Planning for managing the procedure of the IM and/or A Planning to discover from the method Stage 2-Combination and Integration Choosing the integration manager Designing/implementing teams Creating the new structure/methods/ leadership Retaining key employees Motivating the employees Managing the change procedure Communicating to and involving stakeholders Deciding on the HR policies and practice Stage 3: Solidification and Assessment Solidifying leadership and staffing Assessing the new strategies and structures Assessing the new culture Assessing the new HRM policies and practices Assessing the concerns of stakeholders Revising as needed Learning from the process Role of the HR Department in M&A activity 1. Developing key methods for a company¶s M&A activities Managing the soft due diligence activity Offering input into managing the method of change three. (2) Mixture and integration of the partners. and (three) Solidification and advancement. (3) Retention of key managers.(2) Communications.

HR must lead decision processes. Programs. and it is a critical and ongoing process that supports the entire merger or acquisition. A good software solution can help management combine workforces by using visualization and workforce organizational tools. Organizations involved in these transactions have the opportunity to adopt a different approach which includes the increased involvement of HR experts. By doing so they will attain aa lot better outcome and increase the chance that the overall deal is a total success. Creativity. As Mergers and Acquisitions activity continues to step up globally. Throughout the process. What about M&A tools? In today¶s mergers and acquisitions. and Processes. Practices. HR in Mergers and Acquisitions Contents [hide] y y y y 1Role of HR in M&As 2Best Practices for Successful M&As 3HR Issues During M&As 4See Also Role of HR in M&As Once a business has decided to merge with another company. they should also focus on building relationships with the new company. . It is of utmost importance to involve HR Experts in Mergers and Acquisitions discussions as it has an impact on key people issues. This task is primarily carried out by Human Resources (HR). Policies.9. Management can then set new budgets and organize the structure to best meet the new organization¶s objectives. an org chart is a requirement as it will make the process of workforce planning easier and quicker. Conclusion Merger and Acquisitions success entirely depends on the individuals who drive the Enterprise. their ability to Execute. prepare the company for integration and execute the actual reorganization. Identifying and developing new competencies The strategic contribution of HR as consisting of the ³Five P¶s´: Philosophy. one of the most important tasks is the combination of the two workforces into one. and Innovation.

talent acquisition and succession planning data. and 'what if' analysis for possible reductions in force or promotions. mapping out of the future company layout. The role of HR during mergers and acquisitions can be separated into three phases: Pre-deal y y y y y y Analyze hierarchies and reporting relationships Identify key personnel Generate headcounts by department Roll up total workforce cost Audit the workforce for diversity and other characteristics Assess government compliance issues Integration planning y y y y y y y y y Model the workforce to determine optimal structure Conduct what if scenario planning to visualize merger integration Collaborate with department managers to plan resources and structures Identify duplicate roles and plan necessary reductions Plan optimal management and reporting hierarchies Determine pay structure and reward systems Determine retirement and benefits structure Align workforce costs with departmental budgets Determine HR technology Integration implementation and communication y y y y y y y Consolidate workforce data into a centralized organizational chart Share the integration roadmap with management Provide managers with adjusted Spans of Control and budgets Publish a view of the new organization to all employees Produce documentation of the merger process for auditors Capture a history of organizational changes as planning progresses Communicate changes in compensation. benefits and reward systems Post-merger workforce management and optimization y y y y y Merge workforce data into a single system of record Ensure the successful assimilation of corporate cultures Align resources with corporate initiatives and business goals Refine business processes and workflow to reduce operational expenses Communicate performance management.Centralizing the data and personnel files helps in the allocation of resources. .

secure. employees. customers. How can you combine two separate cultures into one? How can you ensure that employee morale doesn¶t suffer? Below are 5 best practices for a successful merger or acquisition. the best thing management and HR can aspire to is a smooth workforce integration. vendors and the public. But corporate culture issues and the integration of two groups of people are often more important to the overall success.y Present the unified workforce via a globally accessible. tactics follow easily. management often focuses on the financials. Offer the rationale for the deal and timing for key events. Best Practices for Successful M&As Research shows that most mergers and acquisitions fail to meet the expectations set for them. During a merger or acquisition. Retaining and motivating key employees Identifying and key leadership positions and tapping individuals to fill those roles Helping employees deal with change . intelligent organizational charting system An increasingly important critical success factor in M&A is the ability to identify the organization that is not only the most strategic play but also the best organizational fit. Develop a communication plan establish a two-way dialogue and keep all your constituents informed: shareholders. relocation. Crucial issues that can be overlooked include: y y y y y y Assessing the two corporate cultures : are they dramatically different? Defining the cultural aspects of the new company after combining the two separate cultures Developing a communication strategy : how will people be informed? Of greatest concern to employees: job security. Focus on priority initiatives resources should be allocated based on financial impact and timeline requirements. y y y y y Define the integration strategy with a clearly defined strategy is clearly. Organizations with senior HR leadership are able to analyze the human capital factors during the due diligence process ± often leading to better decisions. new reporting relationships and changes in benefits. Establish leadership at all levels assigning leaders early on will minimize uncertainty and establish accountability Manage the integration as a business process the strategy must be executed in a timely fashion HR Issues During M&As In implementing a merger or a corporate acquisition.

immediate communities. Succeeding discussions look into the causes of failures. mergers and acquisitions are important decision and processed for many business firms seeking to achieve business and strategic goals by combining with another firm. the different types of business firm combinations constitute transactions with implications to various stakeholders including firm leaders. Due to the goal accomplishment direction of mergers and acquisitions. mergers and acquisitions are not simple transactions because of the significant failures. managers. p. This is because the success and failure of mergers and acquisitions affect not only the business firms but also possibly the industry. and the economy as a whole. p. 1) As such. These transactions involved billions of dollars often exceeding the gross domestic product of small countries. Mergers and acquisitions have become a widespread aspect of the corporate development of business firms and industries so that less than five years ago the rate of mergers and acquisitions occurring in the corporate world has reached one such transaction every eighteen minutes or an annual rate of thirty thousand transactions. employees. especially the assumption that failures are more likely caused by soft rather then hard factors. customers and investors as well as the economy within which the business firms operate. .Legal Aspects of Mergers and Acquisitions 0Share Legal Aspects of Mergers and Acquisitions Introduction Mergers and acquisitions comprise the collective term used to describe the integration of two business firms directed towards the achievement of common business and strategic objectives. s1) However. (Sudarsanam 2003. (Cartwright & Schoenberg 2006.

which are 1) mergers. 2) acquisitions. it is also important to recognize a number of different mergers and acquisitions. Apart from distinguishing mergers and acquisitions. this is similar to acquisition but only with the common consideration that the company taking over another is a larger firm. The rationale for the distinctions is in terms of the process and requirements to follow. could determine the actual success of mergers and acquisitions. This is similar to an acquisition except that the acquisition can cover only a business unit in a buyout that would not affect the existence of the other business firm. 3) This means that success factors have similarities and differences for the different transactions and understanding differences in success factors. While these specific transactions all comprise business firm combinations for the achievement of business and strategic goals. and 4) takeover. With acquisition. This means that mergers comprise one transaction while acquisitions cover acquisitions. p. and the impact to the stakeholders in case of successes and failures. In mergers. In the case of a buyout.Understanding Mergers and Acquisitions As a collection term. 3) buyout. One type is horizontal mergers and acquisitions . the transaction involves one firm purchasing the majority or all of the assets of another business firm with the effect of shifting ownership to the purchasing firm. (Sudarsanam 2003. mergers and acquisitions pertain to four specific corporate transactions. albeit a reverse takeover could also occur with a smaller firm taking over a larger firm. the regulations to adhere to. encompassing various interests and implications. With regard to takeovers. buyouts and takeovers for discussion purposes. these transactions have distinctions. this could involve the purchase of another business firm or only one of its business units. the combination occurs through the integration and sharing of their respected resources with the mutual understanding that this is necessary in achieving common objectives. The key difference between mergers and acquisitions apart from the change in resource ownership is the possible creation of new business entity in mergers while a new business firm inevitably arises in acquisitions.

the value generated would exceed even the aggregate of the firm values. p. Another type is vertical mergers and acquisitions that cover the transactions between firms holding different positions in the production chain such as the combination of a producer and a distributor. production chain processes.that involve business firm combinations involving potential or actual competing firms holding counterpart positions in the production chain. the different types of mergers and acquisitions involve different processes as well as financial and legal issues that the business firms have to content with. Still another type of mergers and acquisitions falls under other combinations not covered by the previous types so that this includes the integration between two totally unrelated business firms. which pertains to the expectation of business firms. (Reed-Lajoux 1998. mergers and acquisitions involve the combination of resources that could involve financial resources. 3) . 197) Again. and logistics systems. (Clemente & Greenspan 1998. This means that the expectation involves the multiplication of value to determine the synergistic result. Importance of Mergers and Acquisitions In particular. Overall. technological resources. human resource competencies. This type of acquisition implies that the likely objective for the combination is the boosting of the competitive position of the firms or expansion of resources. that after the combination. These benefits constitute one or more of the reasons that business firms engage in mergers and acquisitions. the underlying reason for mergers and acquisitions is the creation of value for stakeholders through synergy. Doing so not only allows business firms engaging in mergers and acquisitions to gain control over the transactions but also to ensure the successful achievement of targets. This means that determining the type of combination is necessary to determine the financial and legal requirements and implications. p. as part of the change management process.

Sudarsanam and Mahate (2006. In the case of hostile takeover. since hostile combinations occur in actual corporate transactions. This means that the determination of the area of combination that best ensures the highest synergistic value for the stakeholders. p. (ReedLajoux 1998. Friendly combinations represent the ideal situation for mergers and situations to usher a positive synergy while hostile combinations constitute a problem area since this may not lead to the creation of synergistic value. Moreover. which defeats the purpose of mergers and acquisitions. the combination is likely to lead to negative synergistic results because the combination is likely motivated by the need to discipline a management deemed to be underperforming. there is need to manage the hostility in order to ensure that expected results are achieved to a similar extent as friendly turnovers in order to justify the transaction.However. In addition. s7) explain the trend in studies indicating that the likelihood of achieving positive or negative synergistic results depends on whether the mergers and acquisitions were friendly or hostile. the actual results depends upon the nature of the mergers and acquisitions. the achievement of the targeted synergistic results is not always achieved with sellers and purchases facing disappointment with the nonaccomplishment of the intended synergistic value. Friendly mergers and acquisitions have the greater tendency to lead to positive synergistic results because these are driven by value-creating objectives. in actual practice. This means that although mergers and acquisitions offer the benefit of creating synergistic value for the combined firms. it is through hostile combinations that that the issue of soft factors. especially corporate culture and the management of cultural changes become determinants of the success or failure of transactions. p. 3) An explanation for the failure to achieve the synergistic targets is the impact of the type of mergers and acquisitions. Processes of Mergers and Acquisitions .

business firms are able to derive lessons on strategies that usher successful mergers and acquisitions by looking at effective and ineffective actions given particular circumstances. First stage is corporate strategy development. (p. Third stage is the structuring and negotiation of the transaction that should be comprehensive to include changes in resource control. 3) identifies a five-stage process of mergers and acquisitions. However. These are necessary for the combined firms to determine whether the transaction has resulted to their intended results. 8) Since audits provide an assessment of the strengths and weaknesses of the results of the transactions based on performance standards. . (p. and human resource conflicts are determined to ease the integration process. integration audits. financial control. business stability. This is necessary in order for the business firms to gain control over the transaction process flows in expectation of intended results and to address emerging issues. 4) This means that corporate strategy planning is necessary or key in mergers and acquisitions. This stage also requires clarity and depth so that the negotiating firms know have an idea of the intentions of the other party and the implications of actions likely to occur after the closure of a deal. which refers to the completion of risk-based audits. Fourth stage is post-acquisition integration that involves the role project-management teams in auditing the internal controls of the acquired business firm together with the development of plans of integrating the auditing functions and systems of the two combined business firms (p. the results of corporate strategy largely depend upon the model developed to support corporate strategy implementation. 6). p. management. 7). Fifth stage is the post-acquisition audit. and performance audits. 5). and other similarly important factor (p.Sudarsanam (2003. Second stage is organizing for acquisitions so that business firms engaging in mergers and acquisitions should organized aspects and factors involved in the transactions (p. It is also in this stage that emerging issues including gaps in communication between the combined business firms. which covers the means of optimizing business portfolios owned by business firms and the manner of changing these portfolios in order to reflect the interests of the various stakeholders. appraisal system audits.

p. p. As such. and the changes in the attitudes and behaviour of the people forming part of the new business firm. (Dimovski&Skerlavaj 2006. Harding and Rouse (2007. p. This allows employees of the firms to exercise flexibility during the transition stage as well as accept the changes in business values and practices. Having a strong learning environment enables business firms to ensure continuity in organizational learning during the transition period of mergers and acquisitions. 4) organizational culture. Soft Factors as Reasons for the Failure of Mergers and Acquisitions The soft factors intervening in the transition or implementation of mergers and acquisitions include: 1) learning environment. and 5) communication. 173) Specifically. p. ensuring the continuity of the learning environment provides human capital with a high incentive for developing trust in the new leadership or management and a motivation for employee satisfaction. Firms initiating mergers and acquisitions should have a strong organizational structure and culture geared towards learning in order in order to support the decision to engage in the integration and changes arising from the implementation of mergers and acquisitions. 126) added that although financial measures are important in determining the success of mergers and acquisitions. it becomes important to utilize both hard factors such as financial ratios and soft factors comprised of non-financial ratios. skills and relationships arising among the human resources. In mergers and acquisitions linking internal and external innovative factors would result to the facilitation of continuous innovation. Organizational learning then comprise a form of competitive advantage because this indicates the ability of human capital to adjust to changes and innovate on processed and systems redounding to the benefit of consumers. 75) .The description of the processes indicates that problems or issues in mergers and acquisitions occur during the implementation stage of the transaction plan. 169) discussed that mergers and acquisitions result to the underperformance of the resulting business firm/s because of the failure of executives to consider both economic and human factors in the transaction. 2) management team. Hard and Soft Factors in Mergers and Acquisitions Bertoncelj and Kova (2007. business firms should also look into the extent that core competencies have been developed through the alignment of the organizational structure with the organizational culture and vice versa. the problem area in the management of the transition or implementation stage of mergers and acquisitions necessarily fall under the operation of the soft factors. Bertoncelj and Kova (2007. The transition or implementation period of mergers and acquisitions greatly rely on innovation or the positive dynamics of the creativity. 3) intellectual capital. the focus is on people. 172) further add that in considering soft factors. p. To manage effectively the transition or implementation period of mergers and acquisitions. The nature and extent that these soft factors influence organizational processes determines the issue of whether the soft factor can be attributed with failures of mergers and acquisitions. the introduction of new business values. (Bertoncelj&Kova 2007. Learning environment pertains to the management of knowledge as a valuable resource. Since the effect of soft factors are more difficult to measure compared to the hard factors. investments in human capital become an important success strategy for mergers and acquisitions. knowledge.

whether friendly or hostile. In mergers and friendly acquisitions. the solution is simpler because of the mutual sharing of values so that even with these problems one firm ideally contributes what the other does not have and vice versa. With regard to acquisitions. p. (Bertoncelj&Kova 2007. management underperformance problems in the business being acquired creates problems such as lack of management competency contributions from the firm together with resistance and other problems arising from organizational restructuring of the management team. 173) Management team becomes a problem in mergers and acquisitions when there is resistance from the existing management pool of both companies or there is a shortage of competent managers. p. Management team pertains to the new management leading the merged business firms. When one business firm has not been able to establish a strong learning environment. Similar to management organization. In the case of mergers. intellectual capital becomes a problem during the transition period when there are insufficient experts and talents to assess or when the intellectual capital of the firms does not match the new objectives and business values of the firms. 175) In the case of mergers involving the fusion of two business . With regard to hostile acquisitions. (Bertoncelj&Kovac2007. The problem arises more so in acquisitions. while the other has done so before the combination. The team needs to be pre-selected during the planning stage in order to rationalize the retention and creation of new positions for the leadership of the newly emerged business firm. During the transition period of mergers and acquisitions. change becomes necessary in order to integrate the organizational cultures of both firms to develop a single organizational culture that reflects the aspirations of the newly combined firm. when both firms do not have a strong learning environment. However. p. This means that intellectual capital valuation and assessment need to be made during the planning stage in order to ensure smooth transition during the integration of human capital. the integration of inflexible and ineffective learning environments and the resistance or nil adjustability of employees leads to problems in integration of this soft system. the mutual objective of sharing resources indicates the cooperation of business firms in selecting the members of the management team so that he problem is more on the resistance of managers due to the impact of organizational restructuring. especially hostile acquisitions. it is important to manage the evaluation of the intellectual capital of both firms in order to select and form a team that is unique to the merged firms because of the combination of expertise and talents collaborating based on the new business values and objectives. The value accorded to intellectual capital constitutes the differentiating factor for modern business firms operating on a global scale because experts and specialists working for the company determines the capability of business firms to engage in innovations necessary to address emerging business issues. the firm with a strong learning environment can contribute this is a core value to the merger. Organizational culture pertains to the belief and value systems of business firms comprising the basis of identification of human capital with the firm and the framework for the operations of the firm. 174) During the post-acquisition integration stage. lack of sufficient intellectual resources would influence the efficiency and competitiveness of the resulting firm. because of the lack of a mutual synergy objective when compared to mergers.Learning environment becomes a problem in mergers and acquisitions when both the combining business firms have not been able to establish strong learning environments. (Bertoncelj&Kova 2007.

the communication chain and process lengthens because of the need to coordinate with more people and discuss more aspects in detail. the business firms are reminded of the justification for engaging in the merger and the intended results. During mergers and acquisitions. the lack or limited evaluation measures for soft factors make it difficult for business firms to determine the extent of the impacts of these factors during the assessments made during the implementation stage of the merger or acquisition when compared to the greater measurability of hard factors. s32). the communication channels of the two business firms have to be connected to build collaborative relationships among the people forming part of the two business firms. with clarification of these important factors during the transition period. Legal Aspects of Mergers and Acquisitions covering the Soft Aspects Legal aspects of mergers and acquisitions cover the hard and soft aspects with laws covering the hard aspects involving taxation. However. This means that it is important for business firms intending to engage in mergers and acquisitions to establish effective communication channels even during the early stages of the transaction in order to ensure the ease in coordination during the transition stage. communication becomes a problem when channels of communication are not open or the parties carry a non-cooperative attitude towards the impending change. there would be no problem unless cultural values covering the resources meant to be shared arise. the failure of business firms to approximate the impact of soft factors or focus on soft factors would likely lead to the failure of the merger or acquisition because of the inability to address important issues such as organizational structure and culture integration or the management of organizational restructuring of human capital. Moreover. In addition. Nevertheless. Based on the consideration of the operation of the soft aspects during the transition or implementation period of mergers and acquisitions. Communication constitutes the key tool during the transition or implementation stage of mergers and acquisitions since it is open and accurate communications in real time that enables the business firms to manage and control the process of resource sharing or integration. liquidation and business registration regulations . Apart from the non-recognition of the importance of these soft factors. these soft aspects become a problem during the implementation stage when these factors were not recognized as important intervening factors during this stage. communications should be clear and open to the extent that only accurate and truthful information to support actions on the part of both business firms. communication becomes a problem when the common goals of the two business firms or the value contribution expected from each other have not been clearly and expressly communicated so that the firms develop the perception that the other business firm have not kept up with its end of the bargain or misrepresented its value contributions. This becomes a bigger problem in acquisitions because of the necessity of integrating the two firms resulting to the inevitable importance of communication to facilitate the exchange of information and the settlement of differences in opinion and interest. 177) In the case of mergers.firms. With regard to acquisitions. p. regardless of whether this is hostile or friendly. (Bertoncelj&Kovac2007. p. when the merger does not involve fusion or integration but only the sharing of resources. the purpose is fusion so that the problem of cultural adaptability constitutes an actual issue during the implementation stage of the acquisition. As such. problems arise when the organizational culture of one or both business firms are not adaptive or when key cultures clash (Teerikangas& Very 2006. With regard to acquisitions.

existing agreements with managers and employees should be considered to determine the ways of providing incentives for cooperation for both employees to be retained in the new organization and employees to be let go during the implementation stage of the acquisition. benefits. then the soft factors of management organization. In addition. there . In addition. removal from employment. separation payments. In the case or mergers and especially in acquisitions. With regard to acquisitions. and other issues governed by the employment laws of the jurisdiction within which the business firms engaging in mergers and acquisition operate or the legal jurisdiction governing the business firm being acquired. (Reed-Lajoux 1998. pp. leaves. benefits. in case of changes in the organizational structure and work conditions of the employees. existing employment contracts should be considered because this constitutes a concern for the employees of the firm being acquired. the need to consider collective bargaining agreements and employment contracts in managing the soft factors during the transition stage may not be necessary when there is no major change in the organizational structure of the business firms. breaks. 34. there would be need to consider these legal contracts to address the concerns or issues of the employees. Labour relations regulations involves the binding agreement between the representative union of the employees with management covering various aspects such as wage rates. if there is no collective bargaining agreement. 367) In the case of mergers. and removal from employment.while laws pertaining to the soft aspects include labour relations regulations and employment welfare standards. intellectual capital and communication would become problematic when employees of the firm being acquired become hostile or uncooperative during the transition period of the merger. training and development. However. the acquiring firm need to consider the collective bargaining agreement in order as a means of integrating the work force of the two business firms. Employment standards cover a wide-range of laws including specifics of the employment agreement such as minimum wager rates. If these factors are not considered. work periods.

are also international standards on health and safety in the workplace. p. skills training and development as part of quality standards. (Reed-Lajoux 1998. After meeting basic legal requirements. When this happens there is need to align the different rules in order to establish a common labour standard within the laws of the countries where the business firms operate. legal compliance can constitute an incentive for cooperation especially when people have to be removed and changes have to be made on tasks and positions. the issue of adherence to labour standards constitutes a sound practice due to the importance of managing soft factors in this type of transaction since a new business firm emerges. and workplace environment regulations. This means that soft factors have greater impact in acquisitions when compared to mergers because of the inevitability of the creation of a new business entity in acquisitions while is only a possibility in mergers. especially to the plans requiring changes in the resource control or organizational structure and culture of business firms. Due to the greater risks and wideranging implications or effects of acquisitions to the different stakeholders. Another reason for the attribution of failures to soft factors is the lack or limited measures in assessing the impact of soft factors. Evaluation of the impact of soft factors supports the provision of the understanding of the issues arising from the operation of the soft factors to facilitate the determination of means of effectively addressing . Conclusion It is true that the failure of a significant number of mergers and acquisitions are attributed to the intervention of soft factors during the implementation stage of these transactions. 236) In the case of mergers. the management of these standards could constitute problems only in case of the differences in the laws and standards applied by the merging business firms. the merging business firms can consider whether to provide greater incentives to managers and employees by considering competitive environment and the objectives of the firms. One reason for the attribution is the increased impacts of soft factors to business success. With regard to acquisitions.

Gradually. Indian companies are back with their appetite to go for ambitious overseas acquisitions in order to log into inorganic growth-driven expansion plans. As such. 2010 With a rebound in global markets. The number of deals also increased to 45 from 15 over the year. 6 important aspects of Global Mergers & Acquisitions byViral Dholakia on April 22. the total value of outbound (overseas) deals by Indian companies grew to over $12 billion in the March 2010 quarter from a measly $52 million seen in the same period last year. According to the quarterly deals data.these problems. the strength of the recovery is ensuring that corporate honchos pull-up their firms back to the normalcy levels of pre-crisis duration a couple of years back. Going further. Finally. another reason for the attribution is the operation of soft factors during implementation more than the planning stages so that actual problems are likely to be caused by these factors relative to the soft factors. increased optimism would lead to revival in the number of outbound deals by the corporate India. the management of these soft factors including the legal aspects are necessary especially in acquisitions to ensure smooth transition. .

the company¶s management whiffed saturation of the urban markets in India along with regime of intensifying price wars. .Indian Mergers & Acquisition Deals Comparison over last year Month Jan 10 Feb 10 Mar 10 Volume 15 13 17 Value* 341. 6 important Aspects of Global Mergers & Acquisitions Global Thinking The foremost requirement for a corporate looking to go global. Even as Bharti holds a numerouno position in the growing telecom markets of India.6 MOnth Jan 09 Feb 09 Mar 09 Volume 5 6 4 Value* 40. closure of mega-deals may need to determine and verify several aspects in order to envelope a seamless coming together of two different entities from different culture and locations altogether.2 135.2 * in million / # according to data from Grand Thorton India However.7 52.3 615. BhartiAirtel¶s take-over of Zain Telecom is a case in point. to start with. is to change the old technocrat mindset and think big and global. Companies working in overly competitive environment have to change fast as per the evolving dynamics in their industry of operation.8 12303.

It could be in the form of local land acquisition laws or even local labour laws with different set of trade union rules. if the move is likely to give the company a quick head-start within a given market. Flexible Decisions & Adaptability to Change Companies have to ensure that their business decisions and mandates are flexible and adaptable to change in the overseas markets. At the same time.7 billion deal. Similarly. As per an estimate only one in two Africans hold mobile phone and with Zain having strong presence in most of the countries in Africa. The regulatory issues of overseas destination have to be tackled in conformation with local jurisdiction laws and rules under the recommendations of local legal experts. A product which is an instant hit domestically need not necessarily be as much viable in a foreign market. . if the deal is likely to be earnings accretive over the longer duration it may be worth it to go for a bold move. In most of the mega-deals. the valuations are often touted as being overtly expensive in terms of pricing. Different countries are governed by diverse set of jurisdiction processes. Bharti has taken a lead in diversifying its risks involved in domestic markets. Take the case of Tata Steel¶s acquisition of UK¶s Corus. it must be kept in mind that merely pricing and valuation should not form a base of final decision. Even long term impact of the deal should be taken into account. the company initiated a bold step of acquiring African assets of Kuwait¶s Zain Telecom in a whooping $10. Preferably. both the CEO and the CFO of the company needs to figure out the net cost-benefit analysis involved in acquiring an overseas company. Pricing and Valuations Pricing and valuations at which the targeted firm is being taken over is the most crucial decision to be taken while contemplating a global acquisition move. Abiding Local Laws An overseas company targeted to be acquired is governed by specific local laws and policies. The example of BhartiAirtel provided above fits perfectly well under this heading too. where the initial strains have begun to show through labour issues and could likely result in labour strikes on account of Tata Steel¶s decision to mothball its Teesside unit in northeastern England. it could be worth it rather than going for slow organic growth process unless the valuations demanded are above realistic levels. inviting wrath of analyst¶s community over valuations. But.Without being content with their current market share and stature.

would act as an added boost for an able aid to top management in working our local business strategies for the company. Serving to Social Causes of Local Destination A foremost most rule that drives any top class company is to serve the social causes of the society. The telecom company played well its cards related to low-cost. y . It could be donations to charity organization and leprosy hit people. preferably even on the board seats. high-volume game in the growing markets of India. While on the marketing front. A responsible and accountable company would be better-off to part away some small portion of its earnings as a give-back to the local country and its people. Companies can initiate a number of societal objectives like adopting responsibility for improving infrastructure of a specific area or a location. It is not necessary that the same model would work over there too. Most of all. Availing services of the local employee expertise in production and marketing aspect could be seen as a game clinching aspect for going along with overseas ambitions. the company needs to be ready with a Plan B to quickly adapt to the diverse trend of local consumers. even though the new entity becomes a part of one¶s own company post-takeover.Take the case of same company BhartiAirtel. Whatever you give. It could as well be any other social cause which spreads awareness among the people. comes back ± goes the saying. If the volume game does not work over there. it got a firm foothold through this strategy as India¶s premier telecom operator. Employing local people would attract less stiffness from local people on issues related to employment concerns. it could entail relating to diverse tastes of consumers situated in the destination country. the companies should also take accountability about the environmental aspects and welfare of the local country. Higher levels top executives. And now the company is looking to replicate the same model in Africa¶s too. Taking part in rehabilitation of areas hit with natural disasters. It could be more sensible to hire employees from local state who are more acquainted of the local environment conditions and trend dynamics. Diverse Tactics of Marketing An acquisition abroad is like marrying with an entity with distinct features and characteristics altogether. In fact.