MERGERS AND ACQUISITIONS

Merger & Acquisition (M&A)

 Rapid changes in the business in the recent years have
created an appreciable trend towards M&A
 This is found across all industries such as banking,
insurance, trade, automotive, pharmacy, tourism and
others
 The advantages of mergers and acquisitions are speed of
achieving results, the expansion of competence and
capacity, product differentiation, and the like
 The disadvantages are the need of large financial
resources, hard process of harmonization of corporations
(the culture, the unwanted parts of enterprises, different
business methods) and involving a high risk
What is meant by M & A?
 M&A refer to the process of one company combining with one
another.

 In an acquisition, one company purchases the other outright.

The acquired firm may not necessarily change its legal name or
structure but is now owned by the parent company

 A merger occurs when two separate entities combine forces to

create a new, joint organization.

 Mergers and acquisitions may be done to expand a company's

reach or gain market share in an attempt to create shareholder
value.

 The goal of combining two or more businesses is to try and achieve

synergy – where the whole (new company) is greater than the sum
of its parts (the former two separate entities).
What is M & A?

 M&A are defined as consolidation of companies.

 Mergers is the combination of two companies to
form one, while Acquisitions is one company
taken over by the other.
 The reasoning behind M&A is that two separate
companies together create more value compared
to being on an individual stand.
 With the objective of wealth maximization,
companies keep evaluating different opportunities
through the route of merger or acquisition.
What is M & A? (Contd.)

 The acquisition is friendly, if implemented by agreement of

both sides and hostile if there is no consensus between
management of the companies
 Merger is kind of transaction where two or more companies
"merge" into a new legal entity and those connected legally
cease to exist. All assets and liabilities of two firms are
combined together.
 Mergers are most likely to occur between competitors, which
mean that these companies were from same industry.
 Normally, companies of similar size and economic strength
merge together. Name of newly created company usually
includes names of both companies
Motives for M&A
 The most common motive for sellers is to improve
efficiency and focus on core activities, while the motives
for buyers are truly numerous, and they are never
caused by just one motive, but by many of them
 Motives for successful merger or acquisition are
synergy, improvement of management, diversification,
financial benefits, market power, increasing
productivity, efficiency, and the price of company shares
 The motives for international transactions are:
consolidation, expansion into foreign markets, access to
new technologies and expansion of competences
Reasons for Mergers and
Acquisitions
 Financial synergy for lower cost of capital
 Improving company’s performance and accelerate growth
 Economies of scale
 Diversification for higher growth products or markets
 To increase market share and positioning gaining broader
market access
 Strategic realignment and technological change
 Tax considerations
 Under valued target
 Diversification of risk
Benefits of M&A
 Reduction of unit costs
 Greater availability of capital
 Achieving economies of scale
 Developing core competencies to enter new markets
 Increasing market share
 Expanding product portfolio and services
 Eliminating competition
 Accessing new supply and distribution channels
 Developing new products
 Reducing the political, financial and other risks
How M & A Take Place?

 By purchasing assets

 By purchasing common shares

 By exchange of shares for assets

 By exchanging shares for shares

Types of M & A

1. Horizontal Merger / Acquisition

 Two companies come together with similar
products / services.
 By merging they are expanding their range but
are not essentially doing anything new.
 In 2002 Hewlett Packard took over Compaq
Computers for $24.2 billion. The aim was to
create the dominant personal computer supplier
by combining the PC products of both companies.
Types of M & A (Contd.)

2. Vertical Merger / Acquisition

 Two companies join forces in the same industry
but they are at different points on the supply
chain. They become more vertically integrated
by improving logistics, consolidating staff and
perhaps reducing time to market for products.
 A clothing retailer who buys a clothing
manufacturing company would be an example
of a vertical merger.
Types of M & A (Contd.)

3. Conglomerate Merger / Acquisition

 Two companies in different industries join
forces or one takes over the other in order to
broaden their range of services and products.
 This approach can help reduce costs by
combining back office activities as well as
reduce risk by operating in a range of
industries.
Types of M & A (Contd.)

4. Concentric Merger / Acquisition

 In some cases, two companies will share
customers but provide different services.
 An example would be Sony who manufacture
DVD players but who also bought the Columbia
Pictures movie studio in 1989. Sony were now
able to produce films to be able to be played on
their DVD players. Indeed, this was a key part of
the strategy to introduce Sony Blue-Ray DVD
players.
Principle behind any M&A is
Synergy

 The synergy value can be seen either through

the Revenues (higher revenues), Expenses
(lowering of expenses) or the cost of capital
(lowering of overall cost of capital).
Three important considerations

 The company must be willing to take the risk and

vigilantly make investments to benefit fully from the
merger as the competitors and the industry take heed
quickly
 To reduce and diversify risk, multiple bets must be
made, in order to narrow down to the one that will
prove fruitful
 The management of the acquiring firm must learn to
be resilient, patient and be able to adopt to the
change owing to ever-changing business dynamics in
the industry
Stages in M & A
 Phase 1: Pre-acquisition review. This would include
assessment of the company from a point of view of
possibility of acquiring, ascertain the valuation
(undervalued is the key) and chalk out the growth plan
through the target.
 Phase 2: Search and screen targets. This would include
searching for the possible takeover candidates. This
process is mainly to scan for a good strategic fit for the
acquiring company.
 Phase 3: Investigate and valuation of the target. Once
the appropriate company is shortlisted through primary
screening, detailed analysis of the target company has to
be done. This is also referred to as due diligence.
Stages in M & A (Contd.)

 Phase 4: Acquire the target through negotiations.

Once the target company is selected, the next step is
to start negotiations to come to consensus for a
negotiated merger or a bear hug (forcibly acquiring).
This brings both the companies to agree mutually to
the deal for the long term working of the M&A.
 Phase 5: Post merger integration. If all the above
steps fall in place, there is a formal announcement of
the agreement of merger by both the participating
companies.
What is Due Diligence?

 Due diligence is a process of verification,

investigation, or audit of a potential deal or
investment opportunity to confirm all
relevant facts and financial information, and
to verify anything else that was brought up
during an M&A deal or investment process.
 Due diligence must be completed before a
deal closes to provide the buyer with an
assurance of what they’re getting.
Importance of Due Diligence

 Transactions  that undergo a due diligence

process offer higher chances of success.

 Due diligence contributes to making

informed decisions by enhancing the quality
of information available to decision makers.
Due Diligence: From a
Buyer’s Perspective
 Due diligence allows the buyer to feel more
comfortable that his or her expectations
regarding the transaction are correct.

 In mergers and acquisitions (M&A),

purchasing a business without doing due
diligence substantially increases the risk to
the purchaser.
Due Diligence: From a
Seller’s Perspective
 Due diligence is conducted to provide the
purchaser with trust. However, due diligence
may also benefit the seller, as going through
the rigorous financial examination may, in fact,
reveal that the fair market value of the seller’s
company is more than what was initially
thought to be the case.
 Therefore, it is not uncommon for sellers to
prepare due diligence reports themselves prior
to potential transactions.
Reasons For Due Diligence

 To confirm and verify information that was

brought up during the deal or investment process
 To identify potential defects in the deal or
investment opportunity and thus avoid a bad
business transaction
 To obtain information that would be useful in
valuing the deal
 To make sure that the deal or investment
opportunity complies with the investment or deal
criteria
Costs of Due Diligence

 The costs of undergoing a due diligence process depend

on the scope and duration of the effort, which depends
heavily on the complexity of the target company.
 Costs associated with due diligence are an easily
justifiable expense compared to the risks associated
with failing to conduct due diligence.
 Parties involved in the deal determine who bears the
expense of due diligence. Both buyer and seller typically
pay for their own team of investment bankers,
accountants, attorneys, and other consulting personnel.
Due Diligence Activities in
an M&A Transaction
 There is an exhaustive list of possible due
diligence questions to be addressed.

 Additional questions may be required for

industry-specific M&A deals, while fewer
questions may be required for smaller
transactions.
Some Typical Due Diligence
Questions: Target Company
Overview
 Why is the owner selling the company?
 Have there been efforts to sell the company before?
 What are the business plan and long-term strategic
goals of the company?
 How complex is the company (in terms of products,
services, subsidiaries)?
 Has the company recently acquired or merged with
other companies?
 What is the geographical structure of the company?
Some Typical Due Diligence
Questions: Financials

 Are the financial statements audited ?

 What do the financial statements imply about the financial
performance and condition of the company?
 Are margins for the company increasing or decreasing?
 Are future projections reasonable and believable?
 What amount of  working capital is required to run the
company?
 What are the current capital expenditures and investments?
 What amount of debt is outstanding and what are its terms?
 Does the company have enough financial resources to cover
the cost of transaction expenses for the deal?
Some Typical Due Diligence
Questions: Technology/Patent
 What patents does the company have?
 What trademarks does the company
have?
 What copyrighted products and
materials does the company use or
own?
 How are trade secrets preserved?
Some Typical Due Diligence
Questions: Strategic Fit

 What synergies will be obtained?

 What products or services will be provided

that the buyer does not already have?

 Will there be a strategic fit?

Some Typical Due Diligence
Questions: Target Base

 Who are the company’s top

customers?
 What consumer risks are apparent for
the company?
 Are there warranty issues, and what is
the customer backlog?
Some Typical Due Diligence
Questions: Management/Workforce

 What is the current compensation structure

for officers, directors, and employees?
 What are the current employee benefits?
 What are the management incentives or
bonuses?
 What are the policies and employee manuals?
 Detailed background on the company’s
CEO and CFO 
Some Typical Due Diligence
Questions: Legal Issues

 What is the nature of any pending or

threatened litigation?
 What claims, if any, are there against the
company?
 Settled litigations and the terms of
settlements
 Are there any governmental proceedings
against the company?
Some Typical Due Diligence
Questions: Information Technology

 What software packages are being used by

the company?
 What are the annual IT maintenance costs?
 What is the capacity of the usage level of
existing systems?
 Is there a disaster recovery plan in place?
Some Typical Due Diligence
Questions: Corporate Matters
 Charter documents of the company
 Who are the current officers and directors?
 Who are the security holders (holders of options,
preferred stocks, warrants) of the company?
 Are there subsidiaries of the company?
 Current stockholders and voting agreements
 Are securities properly issued and in compliance with
applicable laws?
 Are there any recapitaization or restructuring
documents?
Some Typical Due Diligence
Questions: Environmental Issues
 Are there hazardous substances/materials
used in the company’s operations?
 Does the company have environmental
permits?
 Are there any environmental claims or
investigations related to the company?
 Are there contractual obligations relating to
environmental issues?
Some Typical Due Diligence
Questions: Production Capabilities
 Who are the company’s most significant
subcontractors?
 Who are the company’s largest suppliers?
 What is the monthly manufacturing yield?
 What materials are used in the production
process?
 Are there agreements or arrangements
related to testing of company products?
Some Typical Due Diligence
Questions: Marketing Strategies

 Are there any franchise agreements?

 What are the current marketing strategies in

place?

 Sales representative, distributor, and agency

agreements?
Why Due Diligence Matters

 Due diligence helps investors and companies

understand the nature of a deal, the risks
involved, and whether the deal fits with their
portfolio.

 Essentially, undergoing due diligence is like

doing “homework” on a potential deal and is
essential to informed investment decisions.
Reasons for the failure of M&A

 Poor strategic fit: Wide difference in objectives and

strategies of the company
 Poorly managed Integration: Integration is often poorly
managed without planning and design. This leads to failure
of implementation
 Incomplete due diligence: Inadequate due diligence can
lead to failure of M&A as it is the crux of the entire strategy
 Overly optimistic: Too optimistic projections about the
target company leads to bad decisions and failure of the
M&A
 Example: Breakdown in merger discussions between IBM and
Sun Microsystems happened due to disagreement over price
and other terms. 
Reasons for the failure of M&A

 70% of transactions fail either because the

effects of synergy have been overstated or
because it failed to realize in the integration
process

 The main reasons for failure are usually

reckless decisions of the top management in
key moments of the transaction
M&A to Succeed

 It is important to focus on a good selection of

companies that will be acquired, develop a
good plan, determine actions that will be
taken if an unforeseen situation occurs,
explore the information about the company's
profits and simulate rates of return on
invested capital to avoid losing value for
shareholders
Recent Acquisitions
Recent M&A in India

 Arcelor Mittal.
 Vodafone Idea Merger.
 Walmart Acquisition of Flipkart.
 Tata and Corus Steel.
 Vodafone Hutch-Essar.
Important Acquisitions in
India in Recent Time
Company Acquires Company Acquired
Zomato Uber Eats
Ebix Yatra
Advent International Enamor
Accenture Droga5
Hamleys Global Holdings (HGHL)
Reliance Brands
Silverpush BetterButter
InMobi Roposo
Famous Innovations Three Bags Full
Havas Group Shobiz
Martin Sorrell's S4 Capital WhiteBalance
Publicis Groupe Epsilon
Disney 21st Century Fox
Important Acquisitions in
India (Contd.)
Acquiring Company Acquired Company
Hindalco Aleris
PVR SPI (Sathyam, Escape, Pallazo)
Freshdesk Pipemonk
WNS Global Services Denali Sourcing Services
Byju Vidyaratha
Cadila Healthcare Ltd Sentynl Therapeutics Inc
Wipro Ltd InfoSERVER SA
Axis Bank Freecharge
Nuance Communications mCarbon Tech Innovations
Part of business from TL
Aurobindo Pharma Biopharmaceutical AG of Switzerland
Lloyd Electric’s Consumer Durable
Havells India Business
Flipkart Liv.Ai
Important Acquisitions in
India (Contd.)
Acquiring Company Acquired Company
OYO Rooms Europe's Leisure Group
Apple Intel's Smartphone Modem
Apollo Munich Health
Mortgage Lender HDFC Insurance
Rural Electrification
Power Finance Corporation  Corporation Limited
Bandhan Bank Gruh Finance
Tata AutoComp Systems Ltd TitanX
Walmart Flipkart
Killer Jeans Desi Belle
Important Acquisitions in
India (Contd.)
Acquiring Company Acquired Company
HUL GSK Consumer
Teleperformance Intelenet Global Services
LIC's  IDBI bank
ONGC (Oil and Natural Gas HPCL(Hindustan Petroleum
Corporation Ltd) Corporation Limited)
India UPL Ltd. Arysta LifeScience Inc
Bharti Airtel Tikona
Tata Steel Bhushan Steel
Important Acquisitions in
India (Contd.)
Acquiring Company  Acquired Company
Tech Mahindra Ltd  CJS Solutions
Cyient Certon Software
WNS HealthHelp
Taro Pharma  Canada’s Thallion Pharmaceuticals
Piramal Enterprises Business from Mallinckrodt LLC
Bharti Airtel Telenor India
Sony Corporation TEN Sports from Zee
Cognizant Technology Solutions Brilliant Service Co. Ltd:
Dr. Reddy Laboratories Ltd. Imperial Credit Private Limited
 Important Mergers in India
First company Second Company
Indus Towers Bharti Infratel
National Institute of Miners’ Health ICMR - National Institute of
(NIMH) Occupational Health (NIOH)
Indiabulls Housing Finance Limited
(IBHFL) and Indiabulls Commercial Lakshmi Vilas Bank Limited (LVB)
Credit Limited (ICCL)
Capital First IDFC Bank
Housing.com PropTiger.com
Vodafone India Idea Cellular
Bank of Baroda Vijaya Bank and Dena Bank
Bhartiya Mahila Bank, SB of Bikaner
State Bank of India and Jaipur, SB of Patiala, SB of
Travancore
IndusInd Bank Bharat Financial
Flipcart E-bay India
Tata Steel ThyssenKrupp
Mergers and Acquisitions:
Case Study 1
 Sun Pharmaceuticals acquires Ranbaxy:
 The deal has been completed: The companies have got the
approval of merger from different authorities.
 This is a classic example of a share swap deal. As per the deal,
Ranbaxy shareholders will get four shares of Sun Pharma for
every five shares held by them, leading to 16.4% dilution in the
equity capital of Sun Pharma (total equity value is $ 3.2bn and the
deal size is $ 4bn (valuing Ranbaxy at 2.2 times last 12 months
sales).
 Reason for the acquisition: This is a good acquisition for Sun
Pharma as it will help the company to fill in its therapeutic gaps in
the US, get better access to emerging markets and also
strengthen its presence in the domestic market. Sun Pharma will
also become the number one generic company in the
dermatology space (currently in the third position in US) through
this merger.
Mergers and Acquisitions:
Case Study 1 (Contd.)
Objectives of the M&A:
 Sun Pharma enters into newer markets by filling in the gaps
in the offerings of the company, through the acquired
company
 Boosting of products offering of Sun Pharma creating more
visibility and market share in the industry
 Turnaround of a distressed business from the perspective of
Ranbaxy
 This acquisition although will take time to consolidate, it
should in due course start showing results through overall
growth depicted in Sun Pharma’s top-line and bottom-line
reporting.
Mergers and Acquisitions:
Case Study 2
CMC merges with TCS
 This is a merger in the same industry (horizontal) and
was done to consolidate the IT businesses.
 The objective of this merger, as indicated by the
management of CMC, was that the amalgamation will
enable TCS to consolidate CMC’s operations into a
single company with rationalised structure, enhanced
reach, greater financial strength and flexibility.
 Further it will aid in achieving economies of scale,
more focused operational efforts, standardisation and
simplification of business processes and productivity
improvements.
More Real World Examples of
Mergers and Acquisitions
Exxon and Mobil 
 Exxon Corp. and Mobil Corp. completed their merger in
November 1999 following approval from the Federal Trade
Commission (FTC).
 Exxon and Mobil were the top two oil producers respectively
in the industry prior to the merger.
 The merger resulted in a major restructuring of the
combined entity, which included selling more than 2,400 gas
stations across the United States.
 The joint entity continues to trade under the name Exxon
Mobil Corp. (XOM) on the New York Stock Exchange (NYSE).
More Real World Examples of
Mergers and Acquisitions
AT&T Buys Time Warner
 On June 15, 2018, AT&T Inc. completed its acquisition
of Time Warner Inc. However, due to intervention by
the U.S. government to block the deal, the acquisition
went to the courts, but in February 2019, an appeals
court cleared AT&T’s takeover of Time Warner Inc.
 The $42.5 billion acquisition will realize cost savings
for the combined entity of $1.5 billion and revenue
synergies of $1 billion, which are expected to be
realized within three years of the close of the
acquisition.
Merging “HP Way” with Compaq
Culture
 Hewlett-Packard CEO Carly
Fiorina (left) wanted to inject
Compaq Computer’s
responsiveness into H-P’s
culture by merging the two
firms. Meanwhile, Compaq
suffered from clashing
cultures a few years earlier
when acquiring Digital © Reuters/New media, Inc./ CORBIS

Equipment Corp., so Compaq

executives were careful to
ensure the merger with H-P
was culturally feasible.
Merging Organizational
Cultures
Acquired company embraces
Assimilation
acquiring firm’s cultural values

Acquiring firm imposes its culture on

Deculturation
unwilling acquired firm

Cultures combined into a new

Integration
composite culture

Merging companies remain

Separation
separate with their own culture
Role of HR Consultants in
M&A
 M&A or other restructuring bring with them
complexities of cultural incompatibility, different
leadership styles, abrupt changes in compensation and
reward system, and shedding off of extra workforce, all
of which affect the organizational effectiveness.
 This requires that an analytical consulting back‐up be
provided to understand, evaluate, plan and manage HR
related programs in such organization.
 Optimizing human resources and creating an
atmosphere of effective decision making and execution
are also crucial during such transition periods
HR Consulting Activities in
M&A
 Due diligence
 Current organizational culture and post‐
merger cultural assessment
 Enabling Cultural transformation
 Planning organizational structure
 Alignment of leaders and leadership styles in
the organization
 Structuring of leadership teams
HR Consulting Activities in
M&A (Contd.)
 Assessing HR capabilities and competencies
 Designing staffing models
 HR planning as per legal requirements of new
country
 Planning and implementing techniques
/programs for change management
 Benchmarking retention
Role of HR Consultants in
M&A
 Consultants assist managers during M&A process,
develop tactics for the transaction, evaluate the target
company and speculate with stock prices of potential
transaction candidate
 They find companies that want to buy other
companies and connect them with those who want to
be bought or are attractive to be bought
 Goldman Sachs, J. P. Morgan, Morgan & Stanley,
Deutsche Bank, Citigroup, BoA, Merrill Lynch,
Barclays are some of the big consulting firms world
wide in this area
Role of HR Consultants in
M&A
 Consultants successfully guide clients through
the whole process, have a large number of
studies and data, know how to solve unexpected
problems, leave much more time for the
management to deal with the company's core
business and its normal operations
 Most consulting companies not only provide
advice but also offer many other services in
order to achieve long-term relationship with its
customers
Role of HR Consultants in
M&A (Contd.)
 Consulting companies tend to be professional and
keep the privacy of clients, ensuring them to achieve
goals and reduce their costs as much as possible
 They advise in the whole process and negotiate within
companies, provide assistance to the appropriate team
of experts, co-ordinate the advice received from other
professionals, such as lawyers, advise on financing
transaction, predict the market response to the
transaction in cooperation with experts, advice about
communications with the public and cooperation with
PR agencies and oversee the entire process
Role of HR Consultants in
M&A (Contd.)
Consultant's job in mergers and acquisitions
takes place in several phases:
 Planning prior to the transaction
 The integration plan
 Implementation
 Evaluation of transaction and
 Activities after the transaction
Role of HR Consultants in
M&A (Contd.)
 In the first phase, the consultants must determine that
the top management is fully aware of the activities that
follow and that they are aligned with the strategic goals
of the organization
 The major activities of the preparations for the
integration phase are appointment of persons responsible
for the integration process (integration team),
development of communication plan, the establishment
of a unified organizational structure of merged company,
making decisions about the necessary changes and
assessing their effects, and making an integration plan
Role of HR Consultants in
M&A (Contd.)

 The client should be fully aware of entire

transaction and informed about the non-
financial factors such as culture, human
resources, and other potential problem areas
in post-integration stage of transaction
 This stage emphasizes what will be required
for successful merger or acquisition
Role of HR Consultants in
M&A (Contd.)
 In next phase, all efforts must be focused on
the implementation of the transaction, which
means that the role of consultants in this
stage is to find ways to achieve the best
possible cooperation and communication
between the two companies, to organize a
meeting of top management of both
companies and work on problems and
disagreements that may arise
Role of HR Consultants in
M&A (Contd.)
 At last, in the post-integration phase,
consultants follow the process of merger and
acquisitions, calculate return period, adjust
the organizational structure of the two
organizations, address the issue of back office
technology, manage change and technology,
and possibly correct unwanted behaviour and
reactions
Role of HR Consultants in
M&A (Contd.)
 While the top management is particularly
encouraged by the new situation, the
employees often report the “merger
syndrome” or anxiety and fear because of
cultural differences, differences in doing
business and limited communications.
 To avoid organizational problems, the
consultants in collaboration with
management prepare employees for change
Consulting Timeline in M&A
 The work of HR Consulting Firm begins from the pre‐deal
phase, covers the deal period and continues till at least three
months after the closure of the deal. In some cases, the
consulting can extend up to two years after the deal closes.
 
 The pre‐deal phase includes chalking out the detailed HR
programs and integration plans and activities that are
implemented during the deal phase.
 
 The post‐deal phase involves the field work of directing and
equipping the HR with tailor‐made techniques, tools and
programs of project management and change management
for a smooth and successful transition within the organization
Consulting Process in M&A
 The foremost step in M&A Consulting is to re‐check and
transform the business model of the organization against any
risks arising out of discontinuities and dead‐ends due to transition

 This is followed by compliance assessment and planning, as legal

conformities are crucial to organization’s working and reputation,
particularly in a new country.

 The Consulting Firm next focuses its attention on cultural

integration. Effective cultural transformation is important for
successful transition. This requires designing the program of
change management, by understanding the three basic elements
of drivers, behaviours and outcomes.
 
Consulting Process in M&A
(Contd.)
 Designing and transforming of the HR function is vital in
successfully reaping the benefits of the corporate transaction and
its long‐term success. This requires an analytical assessment,
selection, development and strategic alignment of the HR
leadership styles according to the transitional requirements.

 As per the redesigned business and organizational requirements,

the Consulting Firm identifies current workforce needs and future
workforce trends for the organization.

 Accordingly, the gaps in workforce requirement and availability

are analysed. On the basis of such analysis, selection, retention,
and recruitment of the ‘right’ people are done. This may also
include training, development and motivational
programs/workshops being carried out by HR Consulting Firm.
Consulting Process in M&A
(Contd.)
 Compensation and reward system determination is
also essential during M&A. Considering the financial
objectives and investment plans of the organization,
the Consulting Firm designs the pattern and timing of
the reward system.
 
 HR Consulting Firm, finally, provides a detailed set of
tools, techniques and programs for the organizational
redesign and transformation to be followed by the
newly setup HR of the organization for a sustained
success of the corporate transaction
Pre-Merger Activities
 Agreement of Merger: A full-blown merger may
require either an Agreement of Merger or a Plan of
Merger and Articles/Certificate of Merger.
Requirements vary by jurisdiction
 Depending on what jurisdiction they’re in and the
types of entities involved, different forms may apply.
 Qualifications: If, before the merger, the surviving
entity is qualified in all states where the business of
the non-surviving entity will continue to operate, this
allows for a continuous presence in those jurisdictions.
Pre-merger qualification may also facilitate—or
eliminate the need for—tax clearance, and may make
the post-merger filing process easier
Pre-Merger Activities
 Name availability: If the surviving entity will change its
name as part of the merger, the new name must be
reserved in every jurisdiction where operations will
continue after the merger.
 Amendment: A company may change its name,
increase its authorized capital, or amend any other
portion of its articles/certificate of incorporation in the
merger document. Companies are usually restricted to a
name change only when filing a certificate of ownership.
 Post-merger filings: These filings are made in qualified
foreign jurisdictions as a result of a domestic merger.
They can include filing evidence of merger and formal
withdrawals of non-surviving entities
Pre-Merger Activities
(Contd.)
 Tax clearances: A tax clearance is written
confirmation from the jurisdiction that an entity
is up to date with its tax payments and not in
arrears. Many jurisdictions have tax clearance
requirements that must be completed before
the withdrawal of a non-surviving entity will
become effective.
 Depending on the type of entity and the
jurisdictional requirements, the tax clearance
process can take months to be completed.
Post-Merger Integration
 Officers and directors
 Independent direct appointments
 Banking resolutions
 Delegations of authority
 Inter-company agreements
 Domain name registration
 Trademark registrations
 Business licenses
 Filing evidence or merger or formal withdrawal of
non-surviving entity
 
Role of HR Consultants in
M&A
 The work of HR Consulting Firm begins from
the pre-deal phase, covers the deal period
and continues till at least three months after
the closure of the deal.

 In some cases, the consulting can extend up

to two years after the deal closes.
Role of HR Consultants in
M&A
 The pre-deal phase includes chalking out the
detailed HR programs and integration plans
and activities that are implemented during the
deal phase.
 The post-deal phase involves the field work of
directing and equipping the HR with tailor-
made techniques, tools and programs of
project management and change management
for a smooth and successful transition within
the organization.
The process of M&A
consulting
 The foremost step in M&A Consulting is to re-check and transform the
business model of the organization against any risks arising out of
discontinuities and dead-ends due to transition.
 This is followed by compliance assessment and planning, as legal
conformities are crucial to organization’s working and reputation,
particularly in a new country.
 The Consulting Firm next focuses its attention on cultural integration.
Effective cultural transformation is important for successful transition.
This requires designing the program of change management, by
understanding the three basic elements of drivers, behaviors and
outcomes.
 Designing and transforming of the HR function is vital in successfully
reaping the benefits of the corporate transaction and its long-term
success. This requires an analytical assessment, selection, development
and strategic alignment of the HR leadership styles according to the
transitional requirements.
The process of M&A
consulting
 As per the redesigned business and organizational requirements, the Consulting
Firm identifies current workforce needs and future workforce trends for the
organization. Accordingly, the gaps in workforce requirement and availability are
analyzed. On the basis of such analysis, selection, retention, and recruitment of
the ‘right’ people are done. This may also include training, development and
motivational programs/workshops being carried out by HR Consulting Firm.
 Compensation and reward system determination is also essential during M&A.
Considering the financial objectives and investment plans of the organization,
the Consulting Firm designs the pattern and timing of the reward system.
 HR Consulting Firm, finally, provides a detailed set of tools, techniques and
programs for the organizational redesign and transformation to be followed by
the newly setup HR of the organization for a sustained success of the corporate
transaction
 Thus, a comprehensive analysis and planning provided by the HR Consulting
Firm ensures efficacy of M&A or other corporate transactions, during the
transition phase as well as on long term basis