merges and acquisition in globlalisation

1. MERGERS AND ACQUISITION

2. Mergers and acquisitions (abbreviated M&A)
MERGER:
The combining of two or more
companies, generally by offering the
stockholders of one company securities
in the acquiring company in exchange for
the surrender of their stock.
ACQUISITION:
An acquisition or takeover is the
purchase of one business or company by
another company or other business entity.
Such purchase may be of 100%, or
nearly 100%, of the assets or ownership
equity of the acquired entity.

3. The Role of Human Resources in
Mergers & Acquisitions

4. INTRODUCTION
 The need for involvement of HR managers starts from the beginning
of M&A process i.e at the audit or due-diligence stage
 When the acquirer’s has the maturity and experience ,it can have a
greater impact on the integration phase than if HR is brought after the
merger has take place.
 If HR is valued by the acquiring company’s management , it made it
imperative to think them that people can be greatest asset, challenge
and liability.
 Before the finalisation of the merger deal the acquiring company’s HR
examine the different areas, evaluates different courses of action, in
order to have a smooth transition.
 The HR manager has to minimise the uncertainty prevaling during
the merger process and must strengthen the communication channel
to deal with the issues like morale and productivity.

5.  Further , after the merger being implemented the role of HR manager
becomes that of consultant to reduce interpersonal conflicts, role
ambiguity and confusing procedure.
 HR manager must create a smooth transition process and review the
process with newly formed teams ,manager and supervisors.
 The role of HR manager is also crucial when it comes to compensation
related issues. This is problematic when the 2 companies have
desperate systems.
 Another issues the HR manager has to deal, is redundancies. In any
merger there be termination which almost create hard feelings and
among senior managers, crushed egos.
 The HR manager has to give stress is on the examination of
policies, practices and past actions of the acquired company and find
some commonalities upon which the entity can be build.
 Thus, in general the HR manager play a truth
teller, coordinator, administrator , councellor , coach and agent of
change for the leaders and organization.

6. Role of HRM
HR plays important role at every phase in the process of international
M&A
 PRE-COMBINATION:
HR is closely involved with each of these steps- initial target
screening and pre-bid courtship of the potential target firm, the ‘due-
diligence’ review of the target company , the pricing and negotiation of
the approach the partners will take to the combination and the
agreement on the contract wording of the deal.
 COMBINATION PLANNING AND SIGNING OF THE AGREEMENT:
HR plays a major role in providing advice on how to implement the
deal and anticipated problems that will occur during the
implementation.

7.  PRE-COMBINATION AND IMPLEMENTATION OF THE DEAL:
 One critical aspect of HR’s role is in creating and providing employee
communication about the nature of the merger and about the vision
for the business that will result after the merger has been
consummated.
 In addition HR will perform a critical role in training employees to
accept and to fit into new situation , in developing the new
compensation and benefits system etc.

8. HR helps manage any problems or challenges related to people in
the organizations as the merger or acquisition process unfolds.
 Company Culture
 Human resources helps determine if the cultures of the two companies that are
becoming one through a merger or acquisition are compatible.
 Human resources must have a firm grasp on the culture of the company for which
they work and must study the culture of the other organization to make such a
determination.
 Cultural differences may include how the two organizations define and measure
success within the organization; benefits employees enjoy, such as personal time
and insurance; how problems within the organization are handled; the
management styles of the two organizations; and the overall attitude of the
employees and managers toward business functions and the industry in which they
work.
 Benefits Problems
 During the due diligence portion of a merger or acquisition, which comes after the
purchasing company makes its initial offer to purchase the other
company, management from the purchasing company assess whether the deal
makes strategic and financial sense.
 Human resources from the purchasing company specifically assess the benefits
structure of the other company to uncover any potential problems, such as a
pension plan that is running low on funds or a health insurance package that will
cost a significant amount for the company to continue offering.

9.  Employee Concerns
 People often fear change, and a merger or acquisition creates uncertainty and change for
employees both of the purchasing company and the purchased company.
 Human resources in both companies help smooth out the transition for
employees, helping calm any fears as well as answering questions about how the merger
or acquisition affects each employee individually.
 If the employees of both companies do not have as much fear over the
change, productivity is more likely to stay at previous levels.
 Human resources can detect and address any rumors about layoffs, office relocation or
other changes employees fear, giving feedback to management about employee concerns.
 Changing Roles and Structure
 When one company merges with or acquires another, some changes to both
organizations may occur, such as eliminating redundant positions or combining teams
and departments.
 The process of altering the two organizations so they work together as one can take
months to complete, and human resources plays a vital role in the changes.
 Human resources communicates to employees changes in who they report to within the
company, what team or work group employees are assigned to as well as any changes to
different positions’ roles in the organization.
 Human resources may work with management and employees to alter the job
descriptions of various positions, ensuring everyone understands his role in the newly
altered organization.

10. Human Resources can add value to the M&A life cycle
in the following ways:
# Pre-deal
- help to identify issues/planning due diligence
- plan due diligence for people/organization cultural fit
- help to educate the “deal” team
- help to develop acquisition guidelines
- Due diligence
- estimate people-related transaction costs
- estimate people-related ongoing costs
- identify/assess cultural differences
- estimate people-related savings
- recommend HR policies and programs
- validate intangible assets
- assess costs of integrating HR systems

11. # Integration planning
- develop strategies for employee communications
- design programs to retain key talent
- plan and lead the integration effort
- develop total rewards strategy for new entity
- help new organization cope with change
- define organization blueprint and staffing plan
- monitor employee attitudes and engagement
- manage selection and placement process
- manage de-selection/outplacement process
- outline people goals and guiding principles
- form people-integration teams
- help to manage labor relations
- advise on productivity
- selection method

12. # Implementation
- align HR policies, programs, and practices with business practices
- monitor progress of people-related synergies and ensuring workforce
momentum is sustained
- ensure incentive programs are designed to reward executives and key
employees for achieving the goals of the merger
# HR should also encourage the new company’s leaders to do the following:
- recognize and reward behaviours that support the new culture
- consider cultural behaviours that support the new culture
- align culture with the vision and business strategy of the combined
organization
- identify the desired culture and gain agreement from senior management and
opinion leaders of both organizations

13. Concepts in role of HR in M&A
1. Due deligence should be very clear
2. Employee dis-satisfaction to be avoided
3. Conduct common understanding programmes with the
executive level employees of the company which you are going
to takeover.
4. Negotiate and make the Union Leaders understand about the
entire issue and their future positions after M&A.
5. Clear assessment of Manpower to be done
6. Understand the Org. Structure/Salary Structure and try to
reduce the parity between the two companies.
7. Understand all the legal cases pending with the acquiring
company and take full accreditition of the cases to take nextsteps

14. 8. Information to sent to all the bodies as per statute.
9. Proper Audit with related to Fixed and Tangible asset to be
done and accordingly value to be determined.
10. Proper retrenchment policy to be implemented for excess
staff