MERGERS & ACQUISITIONS

Mergers and Acquisition are mentioned together and interchangeably very usually, but those topics even if are related for describing integration process between companies, they do not mean the same. Acquisition is the purchase of a firm, does not imply 100% ownership and control, and they can be friendly or unfriendly depending on the willing of management of the firm of being acquired. In the other hand, Mergers happen the assets of two similar-sized firms are combined and are not typically unfriendly, that simple comparison was taken from a class in the Au School of Management (Management, 2009), and give us a picture of the complexity of putting both terms together, and the power they bring to renew corporations (Angwin, 2001).

First of all, it is worthy to highlight that M&A has become a tendency and is known as a widespread activity (Pickston, 2009), due to the last economic changes and the prospect of increasing profitability and market share (Sudarsanam, 1995), and there are other important reasons to deciding go for M&A: Ensure survival and competitive parity, reduce costs (Share costs), gain market power (empire building), financial reasons and so on (Management, 2009). But after come to a decision of get into that process, is necessary making the relation cost-benefit under the Long-term scene, and once this decision is taken is important to prepare the companies involve to face the challenges in order to have a successful integration, creating value and opportunity. Those challenges include cultural differences (Social and Organizational Cultures) that represents important concerning even for HR studies (PricewaterhouseCoopers International Limited, 2005), differences in Industrial systems and differences in goal orientation (Alzira Salama, 2003) and going through the process is to reconciling those differences to get win-win results for the parties implicated, and going from diversifying portfolios to increase market share and then, generate expected value.

Challenges and Opportunities about M&A

From Journal of European Industrial Training: “Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies: Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo.”

Challenges

Integration Strategies: Planning the Integration process is a crucial part of this process,; it must be carefully planned and executed, starting for identify any significant differences or similarities between the core values, beliefs, attitudes, and management style (Alzira Salama, 2003). Since this is intendment to minimize culture clashes and creating a new organizational joint culture, training up a group and including external consultancy are necessary for success. As done in Ford-Volvo case, a cultural awareness exercise conducted before close the deal, facilitated learning and acculturation process, generating better understanding in the early stages (Alzira Salama, 2003).And in the big picture, reconcile the need for strategic interdependence between both firms, but at the same time, the need for organizational autonomy. In that order, we can identify main issues when carrying through M&A:

• Minimize uncertainties of future direction: non repetitive personal. Joint after accomplishing same goals and objectives.

• Acculturation process: Understanding others practices, in the individual and in the organization in order to increase the willingness to build common identity. Abolishing the perception of separate entities: “From us and them into the more inclusive we” (Alzira Salama, 2003).

• Transferring Knowledge properly: As there are different HR policy, production systems and even technologies, is necessary to generate the atmosphere through the right Integration strategies, which increase the willingness to co-operate.

Finally, it is possible to see how the factors that contribute to tough challenges, turn over to opportunities for the firms involved once they have been overcome.

Opportunities

Once companies get into the process and discover themselves in a hard journey, require the vision of taking advantage of the panorama to use situations in order to reach the goals that trigger that process. The Learning Process was clearly the success and the principal outcome from the analyzed cases, those were the ones that raised real opportunities to the firms and lead them to create value from their experiences.

Pursue Organizational learning: M&A may trigger this kind of process, creating the scenario to intercultural and inter-organizational learning to occur (Alzira Salama, 2003)

• Applying the other companies best practices (carefully planned and being pertinent to the case), making every firm to improve own activities and practices.

• The creation of a new organizational identity, with a new organizational culture that gradually emerged, reflected in performance and profitability making companies feel stronger to compete in the market and set up new aspiring goals.

• Accumulation of skills and knowledge that actually provide the new organization with tools to outperform other ones in their environment.

Finally, it is possible to see how the factors that contribute to tough challenges, turn over to opportunities for the firms involved once they have been overcome.

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BIBLIOGRAPHY

Alzira Salama, W. H. (2003). Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies - Deutsche Bank-Bankers Trust: British Petroleum-Amono: Ford-Volvo. Journal of European Industrial Training , 313-321.

Angwin, D. (2001). Mergers and acquisitions across European borders: national prespectives on pre-acquisition due diligence and the use of professional advisers. Journal of World Business Vol 36 , 2-57.

Management, A. S. (2009). Mergers and Acquisitions. Thailand: Marketing Department, Competitive Analysis and Strategy.

Pickston, D. (2009). uk.Fujitsu.com. Recuperado el 18 de 10 de 2010, de http://www.fujitsu.com/uk/insight-opinion/insights/disaggregation.html

PricewaterhouseCoopers International Limited. (2005). Survey of Global HR Challenges:Yesterday, today and tomorrow*. Delaware: World Federation of Personnel Management Associations (WFPMA).

Sudarsanam, P. (1995). The Essence of Mergers and Acquisitions. London: Prentice-Hall.

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