QUESTION 13 (B)

According to Hanson (2001), ‘early coordination between HR specialists in both merging

companies is ideal but due to the sensitive nature of many organization transactions, it is
possible that the HR team on the receiving side of the transaction will be notified before the
team on the sending side, or vice versa’.
Hanson (2001) advocated that the use of project plan as an organizational tool to schedule
necessary action and set deadline. However, a simple plan document an relating to HR issues
should have considered prior to merging between AP and PP which is listed below:
1. Major steps in the merging process between AP and PP
2. A breakdown of specific tasks within each step
3. Ownership of each steps i.e. who is responsible
4. Completion date of each task
5. Comments/state of progress.
In the merging process between AP and PP, an earlier stage of merging the HR professionals
should have been involved because HR managers have demanding task of integrating various
HR practices and performing two other roles simultaneously: A strategic role for company-
wide integration and also a support role for business unit transaction (Antila, 2006). It means
that HR specialists must be familiar with the both organizations’, AP and PP, long term
strategic objectives, their business and marketing plan. HR professionals must contribute to
“target screening” to identify the possible constraints and evaluating the worthiness and the
integrate-ability of both AP and PP’s human assets. This would involve an evaluation of both
companies in terms of their cultures and their potential compatibility which should have been
seriously considered by HR professionals prior to their merging. If HR practices were
involved, the failure of these two companies would have been minimised or eliminated.

Due diligence:

Due diligence is an investigation or audit of a potential investment. Due diligence serves to

confirm all material facts in regards to a sale. Due diligence is a way of preventing
unnecessary harm to either party involved in a transaction. Before merger and acquisition
take place, AP should have conducted a more serious, more onerous and more tedious
process commences: Due Diligence which means to make sure that all the facts regarding the
firm are available and have been independently verified. All the documents of the firm are
assembled and reviewed, the management is interviewed and a team of financial experts,
lawyers and accountants descends on the firm to analyze it.

In any acquisition or merger like AP and PP, the companies need to be examined thoroughly
their market condition before they have sealed off the deal. AP could be benefited if the
company highlighted importance the due diligence in the early stage of the merger and
acquisition.

Due diligence involves looking closely at all the both AP and PP’s records: statutory financial
statements; internal process controls; management accounts, budgets, analyses and
projections/forecasts; contracts with employees, suppliers, customers and others; insurance
policies... and assembling the jigsaw.

Before merging with PP, AP must appoint ONE due diligence coordinator. This person
interfaces with all outside due diligence teams. He collects all the materials requested and
oversees all the activities which make up the due diligence process.

The firm must have ONE VOICE. Only one person represents the company, answers
questions, makes presentations and serves as a coordinator when the DD teams wish to
interview people connected to the firm.

The DD is a process which is more structured than the preparation of a Business Plan. It is
confined both in time and in subjects: Legal, Financial, Technical, Marketing, Controls.

Culture Issue
Cultural assimilation has long been considered a critical factor in successful mergers. Every
company has its own culture. Cultural alignment should be given a priority because
management risks allowing the culture of the new organization to move in a direction that is
misaligned with that organization's objectives. Cultural gap grows wider and becomes more
difficult to address with each passing day.
Even before a deal is announced, the due-diligence team should define the objectives around
a cultural integration and include those objectives in the merger integration plan. A cultural
assessment—built through surveys and interviews of key management constituents—will
help teams define the desired cultural state along with the risks for different culture
combination scenarios. By taking a more disciplined, analytical view of the two
organizational cultures that are being brought together, leadership teams can identify
potential problems and take steps to address them—before they slow down the new business.
Before merging with Printwell Printer, cultural issues should have been given a greater
importance which was not addressed in their M&A deal. The reason behind their failing was
the management team's inability to assess the differences between the two cultures—and
inability to take steps to address those differences early in the integration process. Early
consideration of this issue would mean the difference between a value-creating deal and
ultimately resulting a successful merging between both AP and PP.
Staff condition, pension, wages and other benefits have impact on merger and acquisition.
After AP merged with PP, we can assume that there was a dispute among employees which
had a negative impact on the firm’s profitability because the workers did not receive a
relative wage rise after merging, or their wages perhaps fell below their usual wages rate,
therefore they lost their motivation to work for the company. Employees’ of both AP and PP
pension scheme also may have been affected by the merger and acquisition.

In conclusion, based on the negative outcome the firm (AP) have dealt with after the merger
and acquisition, Amit has learnt that involving Human Resource expertise would have been
beneficial to the company and he might have overcome unexpected loss incurred after
merging. As Amit is planning to acquire a paper manufacturing firm, he could use the
knowledge he acquired from previous merger experience which will enable him to achieve
future sustainable growth and profitability.