Managing Liability Risk After Merger

Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.

Pikula (1999) observes that in merging two or more entities, the management of the companies must adhere to the Sherman Anti-trust Act which was established in 1890. This act was specifically established to prevent mergers from creating monopolies and cartels with an aim to exploit the consumers through determining prevailing market prices. If the merger results in a monopoly, it won’t be approved by the government. Employee contractual agreements must be considered before, during and after mergers. For the merger to go on seamlessly there should be shareholder approval. Initial approval by shareholders for the companies to consolidate their operations helps prevent conflicts from shareholders after the merger. Lastly, regulatory approval should be considered. The management must register the newly formed company. In addition, managers from the merging parties must consider agreements and contracts that the parties are engaging in as these will be transferred to the new company upon the merger.

Due to the diversity of the cultures in the merged organizations, the management team has to facilitate a working culture in the new organization. Each organization

As critical as planning for culture fit is the need to communicate throughout the merger process. A clear and thoughtful communication plan can go a long way in easing concerns, distrust and resistance as employees are challenged to go from the known to the unknown. (Gunn). Even though, we experience many changes, the leaders communicated with us the plan and the timeline to provide a vision and clarity. Jaclyn stated, “They were all very open, if you have questions, please come to us. If you 've got concerns, please come to us. There wasn 't any sort of we need to be quiet; we need to keep quiet”. (Personal communication, September 21, 2015) Furthermore, the leaders worked nonstop to resolve the system issues we encounter and they were attentive to how this affected us. They provided a timeline of what will happen, and when it will happen. According to “Organizational Change and Development” resource, “The key to avoiding or handling resistance to change based on lack of understanding is to communicate clearly what the change entails”. (Organization Development). In addition, I believe we all experience the “DADA syndrome”. The process people go through when

Although each of the challenges listed here are but a handful of challenges that can arise on both sides of the merger, other unexpected challenges or issues can arise that each company, as well as we the managing team members responsible for the successful transition and integration of the two merging teams, must be prepared to handle. However, if the executive staff is able to set and follow ground rules and guiding principles, the challenges that may be experienced will be handled and overcome as they

Post-merger integration work is difficult, political, and often driven by teams that still have day jobs. Budgets are undefined, executive leadership is not clear beyond the C-level, no plans exist, and no one has done it before. Companies are willing to spend money on due diligence ahead of signing the papers, but do not always follow through to ensure that targets are met. In many cases, integration team members are plucked from the “operate and maintain” staff, and either cannot see or do not share the strategic vision of the “design and build” dealmakers. Companies that thrive from mergers do eight things (at least) correctly: Have a Plan, Communicate, and Measure Results, Dedicate the Team, Automate, Plan for Turnover, Focus on Business

Mergers and Acquisitions have been a fundamental growth principle in making a company bigger than the existing two companies by merging them together (merger) or one buying another (Acquisition). There are clear vision and long-term advantages in doing so. In short term this causes organizational integration, financial integration, market integration and business process integration challenges. This analysis examines the operations and supply chain principles at work in delivering the business process integration challenges pertaining to IT projects.

There are four stages organizations undergo when a merger is decided. The first stage of a merger and acquisition is the pre-deal or pre-merger and acquisition; it includes finding compatible business ventures and partners to assess potential targets and develops a plan for execution (HR Focus, 2005). Organizations planning to go through a merger or acquisition must consider the legal implications including equal employment opportunities. HR must examine the policies of both companies and ensure employees are properly trained. Training should include harassment, disability, and

Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions.

Management teams need to feature the necessary business departments, thereby ensuring a smooth transition. When two companies merge, the cultural differences coupled with the variation in corporate values have the capacity to affect the success of the merger. Therefore, it is pertinent to the success of the business venture to ensure that the potency of these variations is mitigated. It then translates to mean that the company needs to implement measures that enable accommodation of the differences between the pertinent firms. Such a measure can only be realized once the concerned departments are factored into the decision-making process. From these relevant departments, input gained will be instrumental in guiding the change process that will ensue (DePamphilis, 2011). The relevant departments may provide a unique understanding of the situation thereby enabling a much more efficient management of the merger.

A merger or acquisition is a combination of two companies where one corporation is completely absorbed by another corporation. The less essential company loses its identity and becomes part of the more imperative corporation, which retains its identity. A merger extinguishes the merged corporation, and the surviving corporation assumes all the rights, privileges, and liabilities of the merged corporation (Gomes, 2011). A merger is not the same as a consolidation, in which two corporations lose their separate identities and unite to form a completely new

Risks. There are many potential risks associated with acquisitions and mergers. According to Allen (2014) risks include “ the miscalculations regarding the scale, scope and change management implications of the integration and the level of assimilation required” to make the transition a success. Another risk is would include the a lack of an adequate or strong communication strategy. Finally, a lack of identification or preparation to ensure key staff and core competencies are identified and a plan is in place to ensure they are retained could prove to be a major risk.

The integration of two organizations’ corporate cultures into one is no simple tasks, as corporate values, norms, and expectations will differ between the two organizations. According to the article how to Successfully Manage a Merger, “roughly 70 percent of all corporate mergers fail, according to the Boston-based consulting firm Bain & Company. Although mergers can head south for many reasons, difficulties created by cultural differences at merged companies seem to play a significant role” (Schatz, 2013). When merging cultures, companies must have a strategic plan that makes culture a priority in the change management strategy. This plans needs to include defining the desired culture, assigning a team to manage the cultural change, outlining the organizational culture that you wish to achieve, developing the cultural change plan, and making sure that progress of the plan is measureable.

These revolve around the question of where do operations need to be integrated, and where the merging businesses can carry on separately. To answer this work with four decision principles (Harding, D. and Rovit, S. 2004). 1) Plan for ownership. Launch integration plans months prior to the deal being publicly announced. Link decisions to the deal's in-vestment thesis and to the synergies and cultural issues identified. Integrate quickly in critical areas. 2) Target areas for integration based on the investment thesis. Mergers aimed at creating economies of scale require almost seamless integration. However, mergers aimed at product extension, customer and geographic scope require selective integration. 3) Put culture high on your leadership agenda. Managers of merged organi-zations need to retool their corporate culture to fit with the deal's investment thesis. Tools include hard tactics-organizational structure, incentives compensation and the di-vision of decision-making authority-to address cultural integration. 4) Retain key re-sources in the core businesses. Mergers can exert a gravitational pull on employees. Keep the talented focused on taking care of business. Develop a plan to maintain key employees and protect the customer base. Effective integration generally ranks as the single most important factor influencing the success of a deal (Harding, D. and Rovit, S.

Lodorfos and Boateng state in their article The Role of Culture in the Merger and Acquisition Process that the “magnitude of cultural differences can effectively impede a successful integration…resulting in poor overall performance” and “cultural heterogeneity creates tensions and affects financial and managerial