Tag Archives: Mergers and acquisitions

Updates from McKinsey

Managing and supporting employees through cultural change in mergers
By Becky Kaetzler, Kameron Kordestani, Emily O’Loughlin, and Mieke Van Oostende – Mergers create vast organizational anxiety about the future: in most cases, the operating model and culture will change dramatically for one or both merging companies. These changes go far beyond a new name and senior leadership; they challenge the core of an organization’s identity, purpose, and day-to-day work. Even small tactical changes, like new expense policies or cafeteria options, can rattle employees. Anticipating and addressing these “organizational emotions” can set the foundation for seamless, effective integration. Failing to anticipate and address them can lead to poor business performance, a loss of critical talent, and the leakage of synergies.

Merging companies must shift the day-to-day behavior and mind-sets of their employees to protect a deal’s sources of value, both financial and organizational, and to make changes sustainable.

One basic problem is management’s tendency to focus mostly on changes that would directly help to capture a deal’s value targets while largely ignoring those required to maintain and enhance the company’s health. Organizational design, for example, is always top of mind in the early stages of merger planning, but companies often sidestep cultural differences until difficult issues come to light. At that point, the base business will already have suffered, top talent may already have looked for external opportunities, and the capture of synergies may have become more difficult.

A holistic, effective integration program should proactively address the full scope of changes your employees will experience in an integration. Managing through this kind of effort involves two broad tasks: embedding cultural changes and managing operational ones. more>

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The Mergers and Acquisitions Cycle: Buy. Divide. Conquer.

By Andrew Ross Sorkin – In the fall of 2001, Hewlett-Packard announced a momentous $25 billion merger with Compaq. Thirteen years later, just this fall, Meg Whitman, HP’s current chairwoman and chief executive, undid that deal, splitting the company in two.

The current deal-making boom has been filled with headline-grabbing mergers. At the same time, corporate America is spinning off assets by the truckload.

All of which leads to the all-important question swirling in the boardrooms of corporate America: Who is creating more value?

Is the bigger-is-better crowd right?

Or is the smaller-and-more-focused pack the one to follow?

And is the premise of the question even correct? Is it an either-or proposition? more> http://tinyurl.com/pou6slw

Why I Left United Airlines

By Tim Wu – Modern American corporations rarely degrade service in bold, attention-getting ways. Rather, it is a kind of suffering by a thousand cuts, each individually unnoticeable but collectively defeating.

The quality of our day-to-day life has come, in large part, to depend on a few companies that are responsible for the service-intensive industries upon which we all rely.

I’ve come to think that the ritualized abuse that we, as consumers, have become accustomed to in so many areas of life is a sad indictment of our civilization. more> http://tinyurl.com/mouff5b

The Executive’s Guide To Mergers And Acquisitions

By Michael Glessner & Alexander Tang – Each merger is different, but most companies can expect to experience many of the following pains:

  • Dispersed technical solutions across business sites and segments (ERP, PLM, PPM, QMS and others). Existing solutions within each company can include multiple packages from various vendors which were never fully integrated from previous mergers, which significantly adds to the complexity of the situation
  • Lack of discipline around existing business processes including new product development, new technology development and portfolio management
  • Varying levels of willingness to integrate
  • High number of procedures for employees to follow with many outdated ones still in effect
  • Lack of balance between required design control requirements and business objectives (this is even more important in regulated industries)
  • Significant resource constraints

Faced with dismal numbers and many of the challenges above, the operations executive is often betting his or her career based on the results of the integration effort. more> http://tinyurl.com/mr6msgp

GE Signals Time to Strike Is Now as Deals Surge: Real M&A

By Brooke Sutherland and Tara Lachapelle – In the first quarter, more than 5,000 mergers or acquisitions were struck across all industries globally for a total of $660 billion, a post-financial crisis high.

“Right now, almost any deal could be put together with attractive financing, where the Excel spreadsheet tells you it’s a plus, not a minus,” Michael Shaoul, who oversees more than $20 billion as chairman and chief executive officer of Marketfield Asset Management LLC., said.

“We’re exactly five years into a recovery in global corporate profitability, and you have a bond market that’s open for business at ridiculously low rates. Now, corporate management teams are starting to build this mentality that they’re going to be a buyer or be bought.” more> http://tinyurl.com/m2uqjuy

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Verizon gorilla eyes Vodafone gorilla – who will win?

By Kamal Ahmed – Verizon‘s biggest problem is that Vodafone is in no hurry to sell. Even though many judge the present relationship “sub-optimal”, and Verizon is clearly agitating for a change, Verizon Wireless is posting growth rates at emerging market levels in the most important telecommunications sector in the world – America.

“I think the merger or full takeover scenario, although not at the forefront of discussions right now, could actually end up being the more palatable deal,” Ralph Brook-Fox, UK equities fund manager at Ignis Asset Management, a top 40 institutional shareholder in Vodafone, told Reuters this weekend. more> http://tinyurl.com/c7u6dte

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HP and IBM: Two paths, one future

By Kevin Kelleher – On the face of it, Hewlett-Packard and IBM have a lot in common. Both are storied brands with rich legacies that shaped high-tech. Both are working with companies large and small to help manage their technology. Both are angling for a piece of the markets — like cloud computing and big data — that promise years of growth.

Despite this bedrock sameness, HP and IBM are pushing forward on different paths. HP is in the midst of a multi-year turnaround, while IBM is building on a long-term plan outlined years ago. Neither company’s path was charted in large part by its current leader. Why? First, their views on the role of hardware versus software in the future of IT; and second, their approach to mergers and acquisitions. more> http://tinyurl.com/98ftubv