HEBER INSTITUTE OF MANAGEMENT STUDIES

STATE LEVEL CONFERENCE (20th MARCH 2012) TOPIC: MERGERS AND FAILURE OF MERGERS
PRESENTED BY: S. AISHWARYA, L. PREETHI, I-MBA.

MERGER
Mergers and acquisitions (M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.

RECENT MERGERS
7/22/2010 General Motors [GM] AmeriCreditCorp 8/14/2010 -BHP Billiton [BHP] Potash Corp 8/19/2010 Intel [INTC] McAfee [MFE] 9/17/2010 Johnson & Johnson [JNJ] Crucell [CRXL] 9/27/2010 Unilever Plc. [UL] Alberto Culver [ACV]

REASONS FOR FAILURE OF MERGERS

Lack of research Diversification

Poor cultural fits

Poor organizational fits Poor managed integration

REASONS (CONTT.)
Failure to set the pace for integration Ego clash

Lack of proper communication

Failure of leadership role Expecting results too quickly

CORPORATE CULTURE
Corporate culture is the way an organization views itself, or its written and unwritten policies and procedures. Paul temple, the match between administrative practices, cultural practices and personnel characteristics of the target and acquirer. It influences the ease with which two organizations can be integrated during implementation.

DAIMLER CHRYSLER MERGER- A

CULTURAL MISMATCH?
A recent example of intercultural failure. Both organizations expected that their merger of equals would allow each unit to benefit from the others strengths and capabilities. Performance become poor. Stock price fell by roughly one half since the immediate post merger high. Differences between the culture of two organizations is the major responsible for this.

 Daimer employees were very formal and structured. Chrysler favored relaxed and freewheeling style.

Daimer tried to impose their culture on chrysler.

Pay scales and travelling expenses were entirely differently viewed. Intercultural understanding is to be recognized within the systems of processes of mergers .

The leaders, managers and HR personnel of companies must have intercultural competency.

CONCLUSION
Business firms now have to face increased competition not only from firms within the country but all over the world. making the mergers work successfully is not that easy as here we are not only putting the two organizations together but also integrating people of two organizations with different cultures, attitudes and mindsets. While making the merger deals, it is necessary not only to make analysis of the financial aspects of the acquiring firm but also the cultural and people issues of both the concerns for proper post acquisition integration.

THANK YOU