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HR Issues in Mergers &

Acquisitions
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA,
PhD(Mgt)
Professor
Al-Qurmoshi Institute of Business
Management, Hyderabad - 500005

1
Nature of Mergers &
Acquisitions
A merger occurs when two organizations of
equal size unite to form a new unit
Mergers are usually voluntary and involve
stock swaps or cash payments to the target
Amalgamation is a another term used to
describe a merger, but usage is confined to
accounting subject

2
Mergers
Mergers may be
Horizontal Merger: when two organizations
producing a similar product combine.
Vertical merger: when two organizations
working at different stages in the production
of the same product combine.
Conglomerate mergers: when two
organizations operate in different industries.

3
Acquisition
Acquisition takes place when a large
company buys out a small unit or vice versa.
The small unit loses its identity and it
becomes one with the large company, which
continues to function in its name.
Where the buyout is forced on the target, it
becomes a hostile take-over

4
Motive behind M&A
M&A are preformed in hope of realizing economic
gains
To provide improved capacity utilization
To make better use of the existing sales force
To reduce managerial staff
To gain economies of scale
To smooth out seasonal trends in sales
To gain access to new suppliers, distributors, customers,
products and creditors
To gain new technology
To reduce tax obligation

5
Pitfalls of Mergers
Undue focus on financial aspects
Employees lose personal effectiveness as a
result of rumours, misinformation and worry
Infrequent and irrelevant communication
Perceived lack of authority and
understanding of the employee when the
new organization forms
Leadership changes and failure to
communicate the vision and goals to the
employees

6
People-related factors that
contribute to acquisition
success
Retention of key talent
Effective communication
Executive retention and
Cultural integration

7
Cultural & People
Issues
Cultural & people issues that have a
major impact on success/failure of
cross-border M&A deals:
Composition of new board
Who will occupy which job?
Integration of culture
Undertaking a human capital audit and
selecting the management team

8
Cultural & People Issues
(Contd.)
Effective communication
Retaining talent & creating new culture
Aligning performance evaluation & reward
systems
Managing the transition
Integration

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