Enumerate.

Assignment

no -1

Que- Why majority mergers and acquisitions failed globally? Illumurate.

It's no secret that plenty of mergers and acquisitions don't work. Those who advocate mergers and acquisitions will argue that the merger will cut costs or boost revenues by more than enough to justify the price premium. It can sound so simple: just combine computer systems, merge a few departments, use sheer size to force down the price of supplies and the merged giant should be more profitable than its parts. In theory, 1+1 = 3 sounds great, but in practice, things can go awry. Historical trends show that roughly two thirds of big mergers will disappoint on their own terms, which means they will lose value on the stock market. The motivations that drive mergers can be flawed and efficiencies from economies of scale may prove elusive. In many cases, the problems associated with trying to make merged or doing acquisitions , companies work are all too concrete.The reasons are given under : 1) Ignorance :- While the parties to a merger or acquisition cannot exchange commercially sensitive information prior to being under common ownership, there is enough crucially important and legally permissible preparation work to keep an integration team busy for several months before day one. Most chief executives dont know this and they waste the time that could be put to good use while they await clearance from the regulatory authorities. Good preparation means the integration can kick off on day one. Speed matters. 2) No common vision :- In the absence of a clear statement of what the merged company will stand for, how the organisation will operate, what it will feel like, and what will be different compared

to how things are today, there is no point of the convergence on the horizon and the organisations will never blend. 3) Flawed Speculations:- The temptation for mergers and acquisitions is usually strongest when there is a booming stock market. The promise of profit in these times compels many corporations to continually invest. Mergers and acquisitions are the best and easiest ways of expanding a business. There is a promise of more savings due to economies of scale, while there would be higher profits due to higher production. However, this tends to overshoot expectations and to produce more than the market can accommodate. Thus the market contracts eliciting a falling rate of profit. Companies would lose value in the stock market, and production and profitability eventually decrease 4) Nasty surprises resulting from poor due diligence :- This sounds basic, but happens so often. 5) Team resourcing :- Resource requirements are very often underestimated. It can take two or three months to release the best players from daily business to join the integration team(s), find a backfill for them, sign up contractors to fill the gaps and set up the teams infrastructure. Most companies start too late and are not ready on once the deal is completed. 6) Poor governance :- Lack of clarity as to who decides what, and no clear issue resolution process. Integrating organisations brings up a myriad of issues that need fast resolution or else the project comes to a stand-still. Again: speed matters, but with a sound decisionmaking process. 7) Poor communication :- Messages too frequently lack relevance to their audience and often hover at the strategic level when what employees want to know is why the organisation is merging, why a merger is the best course action it could take, in what way the company will be better after the merger, how it will feel, how the merger will affect their work and what support they will receive if they are adversely impacted.

8) Poor programme management :- Insufficiently detailed implementation plans and failure to identify key interdependencies between the many workstreams brings the project to a halt, or requires costly rework, extends the integration timeline and causes frustration. 9) Lack of courage :- Delaying some of the tough decisions that are required to integrate two organisations can only result in a disappointing outcome. Making those decisions will not please everyone, but it has the advantage of clarity and honesty, and allows those who do not find the journey and destination appealing to step off before the train gathers too much speed. 10) Weak leadership :- Integrating two organisations is like sailing through a storm: you need a strong captain, someone whom everyone can trust to bring the ship to its destination, someone who projects energy, enthusiasm, clarity, and who communicates that energy to everyone. If senior managers do not walk the talk, if their behaviours and ways of working do not match the vision and values the company aspires to, all credibility is lost and the mergers mission is reduced to meaningless words. 11) Lost baby with bathwater :- Companies contemplating a merger or acquisition too often omit to pinpoint what particular attributes make the other party attractive, and to define how they will ensure those attributes will not get lost when the organisation and the culture have changed. Culture cannot be bought it needs to be embraced. 12) Wrong Processes :- Mergers and acquisitions are important business moves that must be taken into careful consideration. Sometimes, core businesses are neglected because of the problems and tasks associated with the deal. The thrill of the big deal sacrifices the most important work of all-the daily productive grind. Sometimes top managers focus too much on cost cutting to the point that they neglect the more important job of creating more revenues. It also happens that the management of the companies being merged do not follow a smooth transition process. Employees

become uncertain. Conflicts are not resolved as fast creating a domino effect. The merging of two corporate cultures undergo difficulties. Resentment and frustration sets in. Productivity suffers. In the end, the basic operations suffer which is actually the backbone of the business. To conclude, the decision to doing mergers and acquisitions should be carefully studied and the processes to execute them should be meticulously planning.