HR Planning - Merger (Stonewall Case study) Essay

Merging with another organization has downfalls of destroying wealth from the merger. Considering the buying price is important when merging, spending too much on the merger will impound the value after the merger. Some mergers do not create wealth so capital is lost through the merger. There is no guarantee of financial gain and every formula considered with focus, just as with an acquisition. The final decision dictated by the variables. One company merging with another company takes the debt and losses of those companies in the new formed company.

In 2008 British Wallboard, the parent company of Stonewall has seen enough of the volatility in the Canadian construction materials market and sells the company to a competitor, US Corp. Its subsidiary, Canadian Wallboard, and Stonewall will merge into one organization. What are the benefits of the merger to British Wallboard? US Corp? Canadian Wallboard? Stonewall? (10 marks)

The main weakness of merging the two companies would be with the staff. There would be cultural changes, disengaged staff and moral decreases (Iveybusinessjournal.com, 2015). Reorganization would need to be done to

“There is good agreement that the first 100 days after a merger change set the tone, signal the troops about the real direction of the organization and its vitality”(DiGeorgio, 2003,p.266) A slow integration process can actually worsen problems. Merger integration should not be treated as an after-thought. It is something that needs to be addressed during the merger search and negotiations phase while there is time to minimize any negative impacts.

A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate

A risk management and legal issues associated with the mergers can be credentialing. According to Buchbinder & Shanks (2012) the internal control of compliance programs is the responsibility of the board, internal personnel, and management. Some risks that could happen are shortages on registered nurses (RNs), quality of work can go down, and demoting can also cause issues.

In addition, like any other merger between two firms, companies benefit from significant cost synergy during the implementation of an acquisition and/or merger with other company. For example, when two companies combine their strengths to complement each other, they restructure their operations and as a result several offices and sites are closed down which leads to the laying off of employees, consolidating services and software applications. All these changes, result in synergy savings for the new company.

Merger motives that are questionable on economic grounds are diversification, purchase of assets below replacement cost, and control. Managers often state that diversification helps to stabilize a firm's earnings and reduces total risk, hence benefits shareholders. Stabilization of earnings is certainly beneficial to a firm's employees, suppliers, customers, and managers. However, if a stock investor is concerned about earnings variability, he or she can diversify more easily than the firm can. Why should Firm A and Firm B merge to stabilize earnings when stockholders can merely purchase both stocks and accomplish the same thing? Further, we know that well-diversified shareholders are more concerned with a stock's market risk than with its total risk, and higher earnings instability does not necessarily translate into higher market risk.

When companies combine/merge the whole objective is to gain new opportunities, gain market share, grow the business, to become more innovative and to improve product offerings, utilizing/sharing the existing resources and data. From the case

What are the major deal risks inherent in this merger transaction? How and to whom does the merger agreement allocate these key risks? (See, in particular, case exhibit 4.)

The most current issue that is causing a high amount of resistance is the supplies and equipment battles. The facilities all have quality products to offer, and each contains their perks, but as costly as it is even to follow through with a large merger is does come with a cost. So, therefore, when cost is involved then the bottom line is who is more cost-effective.

Many times anxiety can grow because employees fear loss of the organizations traditions. It is important to involve employees on the transition or modifications to traditions, celebrations, and other activities that help shape the organizations culture. It is important for both organizations in a merger to be sensitive to the others rituals and ceremonies and to work towards a compromise and build new traditions supported by the majority.

The cultural roots of each company are difficult to combine even for domestic companies. For two companies from two different countries to merge, the opportunity to misunderstand and disagree is inevitable. The difference in customs, language, values and training means that any merger between companies will not be equal. Calling a merger of equals when it is not will also worsen the internal power struggles for control of the company.

employees will feel unsafe about their job, which will cause the lost of the human resources. What’s more, to optimize the new employee structure and reduce labor cost, amount of employees will face to be laid off. Such a large personnel change will cut down the investors’ trust, because the investor will suspect the stability of the new combined company. Even two similar technology companies still have different corporate culture which can represent the companies’ brand images and affect the customers’ loyalty. They may produce the similar products, but they may differ in the business ideas and background. Hence, how to integrate two companies’ corporate culture in order to exert the joint corporate value is difficult for the new combined company. If the new combined company abandoned one of the company’s corporate culture, they will lose part of customers who already lose the faith to the company.

As we can see on attached charts - Market was not too sure about this merger (“On paper, the deal has much to commend it, many outsiders say”. But thorny issues remain, including how to accommodate the strains between consultants and auditors, potential conflicts of interest involving important clients and even the delicate matter of choosing a new name. If the negotiators are not careful, fallout could haunt the combined firm for years to come.) From the time when merger plans were made public Shares of