International Lodging Merger Case Essay

648 Words Aug 29th, 2012 3 Pages
International Lodging Merger
Role of Lambert Hotel

Lambert Hotel is in second rounds of negotiations with AAA HotelCo of a possible merger between the two companies. Lambert is a strong brand with a luxurious and upscale tres comfortable Michelin rating, and AAA is rated at mid-scale category of equivalent ranking. Culturally, there is a difference in the approach to business mergers. Time wise, Lambert is eager to close the merger with AAA or consider the alternative value that is a safe bet.

During pre-negotiation, the goals at the Lambert team was to aim high and be aggressive, thus providing room to negotiation towards target goals: 1) stock ownership of 60/40 ≤ goal of 50/50; 2) provide one seat on the board ≤ goal to agree to
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When Lambert resisted the idea of a full base salary structure, AAA suggested 5% of the salary bonus be based on commission. Lambert countered offered with 10% -- which was dismissed. Past experience indicates property performance tied to salary compensation is successful, so Lambert proposed 5% of the salary bonus be based on commission with the pay structure be revisited after one year to slowly change the salary structure toward the bulk of salary be commissioned, this was agreed on by both parties. The second biggest issue was team management and cross-training. Lambert proposed the local management team be vetted by AAA with training provided by Lambert – this would require annual mandatory training of AAA upper management team to be in attendance. This proposal was meet with irritation by AAA, offended that their management training was considered less than ideal. Additionally, AAA informed Lambert that local law requires AAA to provide training. Lambert elaborated on the management training with expectation of training to be given by AAA to their own middle management team, allowing for free movement of training. AAA would manage their local training with Lambert assistance when needed.

The final agreement was: 1) Stock ownership agreed at 50/50, equal percentage 2) Board to be divided 5 to Lambert and 3 to AAA 3) Naming of merger to be AAA by