MACR Merger Management (1).docx - Merger Management...

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Merger Management Post-Merger Integration Issues MACR Project 0 | P a g e
Abstract An outstanding feature of the recent post-crisis global economy has been a sharp increase in mergers and acquisitions. According to the Bloomberg 2011 M&A Outlook, in the year to November 2010 there were more than 21,000 such transactions globally, representing a 12% increase on the previous year, with total value in excess of US$1.9 trillion. Over the last decade in particular, many larger businesses have adopted acquisitions strategies as a core aspect of their business approach: back in 2004 it was reported that some companies were conducting 25 or more deals every year, or seeking to achieve 50% or more of their business growth in this way (Chanmugam, Anslinger & Park, 2004) The potential business benefits to a merger or acquisition include the expansion of product lines or markets, a means of gaining a competitive edge in the market, or the ability to secure access to scarce resources or expertise. However, this is also a high-risk business strategy, as evidenced by the extremely merger and acquisition failure rate which is reportedly between 40% and 60% of all deals. In the case of cross-border mergers, failure rates of up to 70% have been reported (Manas, 2011). In some cases, the prospective partners fail to agree on terms and conditions for the merger, and abandon the plans before too much effort is invested; too frequently though, the real problems only arise after the formal merger takes place, and incompatibilities or conflicts between the two formerly separate organizations come to the surface. These problems can often be avoidable, if more attention is paid to the post-merger integration process. Practically every transaction is accompanied by due diligence, with the increased involvement of external specialists such as lawyers, auditors, tax consultants and investment bankers. Yet challenges with post merger integration are consistently high and the resultant threat to a company’s performance perhaps higher than it needs to be. There are no hard and fast rules to ensure that a given merger will result in corporate wedded bliss. This project discusses an art and science approach to merger management, which is recommended for ensuring a smooth transition to a single organisation. The proposed strategy is grounded in a growing body of research evidence that it is the people-related or cultural aspects of change that most often lead to failed mergers. Addressing these factors along with the logistical aspects of the merger can help to ensure that the business value and positive outcomes that were expected of the merger are realised in practice. 1 | P a g e
Introduction: Integration Strategies Mergers and Acquisitions (M&A) is a change process that deal with the buying, selling or combining of two organizations. This alliance can be due to various strategic factors like increasing market share, reducing competition, diversification etc. The marriage between the

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