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7 Cards in this Set
- Front
- Back
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Merger |
The result of an agreement between two companies to join their operations together. - Company A and Company B form Company C together Horizontal Merger: 2 firms competing in same kind of business come together (collusion, monopoly power). Vertical Merger: in firms in different stages of production Conglomerate Merger: firms engages in unrelated types of business come together. |
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Acquisition |
When one company buys another company with the interest of controlling the activities of the combined operations. - Company A buys Company B to make larger Company A. |
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Benefits of IM&As |
Horizontal mergers - market dominance Vertical mergers - channel control Hybrid mergers - diversification of risk -> synergies ------ Add'l - Move quickly and inexpensively - Flexibility and leverage in market - More assets = higher bargaining power - Adopting potentially disruptive technologies. - Financial gain and personal power - Gaining core competences - Collecting more talent and knowledge |
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Challenges of IM&As |
- Up to 20% of executives may leave - Personnel issues - neglected, no quantifying measure, lack of awareness, no spokesperson, no model to use to understand and manage - HR solutions to address personnel issues can be costly - severance packages, vacation, overtime pay, labour union issues, ... - Failed M&As can = workforce reductions |
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Key Components of People Issues - M&As |
- Retention of key talent - Communication - Retention of key managers - Integration of corporate culture |
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Role of HR in M&As |
Developing strategies for M&A decision - Use of HR execs Managing soft due diligence activities - understand make-up and motivation of two workforces - assess management team of other company - analyze organizational structures - compare benefits, compensation policies, labour contracts Creating transition teams - develop infrastructure for new organization - processes (selection...) - address cultural issues - provide training - retention strategies - help employees cope with change Recasting HR department - develop new policies and practices consistent with vision of new organization - develop HR structure and staffing - determine service delivery model - identify new roles for HR leader (partnership, change facilitator, strategy implementor, strategy formulator, innovator, collaborator) |
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M&A Phases & HR Implications |
Pre M&A phase - screening alternative partners based on analysis of their strengths and weaknesses Due diligence phase - analyzing the potential benefits of the merger Integration planning phase - based on the results of due diligence phasing, plan for company Implementation phase - plans are put into action |
