1.

All stakeholders are affected in some way by a takeover or merger but some more
than others! For stakeholders of the target business, the effect (and response) is
often negative The key issue to what extent are stakeholders able to influence the
effect of the transaction on them?
2. 3. Key definitions Stakeholders: A stakeholder is someone or some
organisation/institution that has an interest in the success of a business. Postmerger integration: the process of bringing all aspects of the acquired business into
the business organisation of the buyer (including customers, employees etc.)
3. 4. The Stakeholder Model Stakeholder model: requires that all of the parties
affected by management decisions, in addition to the shareholders themselves,
management, employees, customers, suppliers, communities in which the business
operates and the environment from local to global, all must be considered as fairly
and justly as possible.
4. 5. Who are the Stakeholders? An individual or group with an interest in an
organisation Any individual or group who can affect or are affected by the
achievement of a firms objective Groups/individuals that: have an interest in the
well being of the company and/or are affected by the goals, operations, activities of
the organisation They have a stake in what the organisation does
5. 6. Examples of stakeholders (all can be affected by M&A) Shareholders or
Government business owners Local community Managers & Other external
employees groups (e.g. pressure Customers groups) Suppliers Competitors
Banks and other The media finance providers
6. 7. Potential conflicts between stakeholders Takeover or Merger Decision Supported
By? Opposed By? Shareholders Employees Cut jobs to reduce costs Banks Local
community Management Transfer production to overseas Customers & Local
community location suppliers Introduce new machinery to Customers Employees
replace manual work Shareholders Increase selling prices by 10% to Shareholders
Customers improve profit margins Management
7. 8. Likely negative impact on stakeholdersMost takeovers and mergers are
associated with: Job losses in the acquired business (a direct result of cost
synergies) & knock on effects on local economy. Uncertainty & more job insecurity
particularly as organisational structures & systems are integrated. Potential closure
and / or transfer of capacity to other international locations (e.g. to emerging
markets). Change in the taxation status of the firm profits may be transferred
overseas with a loss of corporation tax for the UK economy.
8. 9. Many examples of adverse reaction
9. 10. Ways to manage stakeholder impact Stakeholders need to be considered &
included in the takeover / merger integration plan. Clear, early and honest
communication about the intentions & plans of the acquiring firm. Focus efforts on

the most important stakeholder groups. For example existing customers of the
acquired firm are crucial, as are employees / management that the buyer wishes to
retain (staff retention consistently shown as a major HR problem with takeovers).
10. 11. Examples of stakeholder responseTakeover / merger Stakeholder reactionKraft /
Cadbury Hostile reaction from employees, unions & local community supported by
media - but not enough to persuade Cadbury shareholders from eventually agreeing
to the bid.LOreal / Body Hostile reaction from pressure groups, media and some
customersShop (raising concerns about LOreal record on animal testing); but quickly
died down.Dubai Ports Negative reaction in the USA to the takeover by a UAEowned firmWorld / P&O that would involve foreign ownership of six ports in
America.Coca-Cola / Widespread customer criticism of Innocents decision to sell a
stake inInnocent their ethically-friendly business to Coca-Cola (who later took
control)Fenway Sports Broad agreement from Liverpool FC supporters who
welcomed theGroup & Liverpool takeover from the previous owners (compare &
contrast withFC continued hostility to US ownership of MUFC
11. 12. Why employees of the target business might welcome or support a takeover...
Opportunities for promotion Investment by the buyer A change of culture A fresh
start (particularly with a merger) Business not well run by existing management (i.e.
a better future)
12. 13. Depends on factors When an acquisition is announced, there are likely to be
conflicts of interest between these different stakeholder groups, depending on their
interest in the firm. E.g. customers may be supportive of the takeover. However,
employees may react negatively if there are significant job losses involved. The
important thing is to consider the impact on the main stakeholder groups. Is the
effect on the stakeholder serious, beneficial or will it hardly affect them at all?
13. 14. Evaluation opportunities Which stakeholder groups actually have the power to
impact the eventual success or failure of a takeover? Whilst there might be
widespread opposition from media & local community are other stakeholder groups
(customers, employees) much more important? Too easy to assume that a takeover
will have a negative effect on internal stakeholders like employees. The transaction
might actually benefit them in the long-run if their business is stronger as a result.