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MERGERS

AND

ACQUISITIONS- SUMMARY

The chapter begins with understanding the purpose and motivation behind M&A
activities, which has 3 basic types horizontal deal, vertical deal, and
conglomerate deal. The reasons could be as follows:
1.
2.
3.
4.

Quick way to grow


Potential synergy between two companies/filling each others gap
Diversifying business outside ones own industry to widen portfolio
Horizontal integration to increase the market share or vertical integration

for better services


5. Defensive measures in response to other mergers which may threaten a
companys position.
6. Pressure on the CEO to do a deal to completion rather than achieve long
term benefits.
Each of the above reasons have their own advantages and disadvantages and
pose important implications for managers.
The thumb rules for change management from different learning sources include
the following points:
1. Strong communication is needed- Rather than simply stating facts and
figures, they need to use effective communication to build relationships
and trust and commitment towards the joint objective. They need to use
all available avenues of communication
2. The structure needs to be clear- We need to create a structure that
preserves the best of what was already there without disturbing it but at
the same time in accordance with the target objectives or as per the logic
behind acquisition.
3. The cultural issues need to be managed- Resolve the incompatibilities in
culture during the very initial stages and integrate culture by making
people work together and make them understand that they could achieve
better results than before the M&A

4. The customers are to be kept on board- Clear ground rules as to who will
control and manage the customer relationship after M&A needs to be
there along with a clear message delivery of message about the
welcoming union and future points of contact for the customers.
5. The overall process needs to be clear during all stages such as preacquisition, foundation building, rapid integration and assimilation with
proper steps defined within each.
The next part discusses guideline for change leaders such as:
1. Managing individuals by creating psychological safety by creating a vision,
acting as a role model and maintaining consistency about the system. We
can

use

the

Kubler

Ross

model

to

effectively

manage

change

interventions.
2. Managing team
a. Managing endings by acknowledging the ending of the old company
and giving some time for employees to grieve over the loss of
familiarities.
b. Managing transition from old to new (Integration). Manage the
phases as listed in the Tuckmans model of team developmentForming, storming, norming and performing.
c. Managing beginnings by not being too hasty to declare victory soon
but celebrate the beginning at the right timing.
3. Managing yourself- Managers might become frustrated because of
repeating the same information and still finding that their teams are
unable to move on. In this, the manager and the team are not in sync with
respect to emotions as per Kubler-Ross curves. The line managers need to
be involved and informed, know people, recognize feeling of anxiety,
manage

their

career,

identify

success

criteria

and

re-benchmark

themselves and be optimistic


4. Handling difficult appointment and exit decisions with all fairness, justice
and attention to the dignity of the employees.

5. Managing organizations by establishing the sense of urgency and need


behind the M&A, forming a powerful guiding coalition and creating a
strong vision, communicating it, empowering others to act on the vision,
creating short term tangible wins, consolidating improvements and making
more incremental changes and institutionalizing new approaches.