HR during merger and acquisition

2. HR during mergers and acquisitions

3. MERGER
• A combination of two things,
especially companies, into
one.
• A merger is a deal to unite
two existing companies in to
one new company .
• A merger is a corporate
strategy of combining
different companies into a
single company in order to
enhance the financial and
operational strengths of both
organization .

4. Acquisition may refer to:
• Takeover , the acquisition of a company
• An acquisition is a corporate action in
which a company buys the legal ownership
of another company.
• An acquisition is a corporate action in
which a company buys most, if not all, of
another firm's ownership stakes to assume
control of it. An acquisition occurs when a
buying company obtains more than 50%
ownership in a target company .

5. Why do companies merge with or acquire other companies?
A company that merges to diversify may acquire another company in a seemingly unrelated industry in
order to reduce the impact of a particular industry's performance on its profitability. Companies seeking to
sharpen focus often merge with companies that have deeper market penetration in a key area of
operations.
Some of the reasons for mergers and acquisitions include:
 Synergy
 Diversification / sharpening business focus
 Growth
 Increase supply-chain pricing power
 Eliminate competition
 Profit maximization

6. ROLE OF HUMAN RESOURCES IN MERGER &
ACQUISITION
Success of merger and acquisitions depends on the
people who drive the business, their ability to drive,
lead, and formulate strategy, execution and
implementation. It is very important to involve HR
professionals in merger & acquisition as it involves
people and has an impact on key people issues. HR
professionals play an active role in the change
process by offering their interventions to help
ensure a successful merger and acquisition.

7. • Composition of new board :- the post merger and acquisition business need
a board for decision making and the board shall comprise members
representing both the firm.
• Deciding the who will occupy which job ? :- the choice of right person for
the right job is crucial as other wise the success of the merger will be
jeopardized .
• Assessing culture :- the purpose of culture assessment is to evaluate the
factors that may influence the organizational compatibility , who under
stand the cultural dynamics as the deal take place.
• Effective communication :- communication feeds the top management
about the integration that should take place between the two marrying
partners senior management should communicate a vision throughout the
company.
• Retaining talent :- retention of talent assumes relevance as competent
employees , particularly of the target company .
• Aligning performance appraisal and reward system :- aligning performance
measurement and reward system task is done by HR manager during
merger and acquisition.
ROLE OF HUMAN RESOURCES IN MERGER & ACQUISITION

8. • Obtaining quality staff or additional skills, knowledge of
your industry or sector and other business intelligence
• Accessing funds or valuable assets for new development.
• Accessing a wider customer base and increasing the market
share.
• Diversification of the products, services and long-term
prospects of your business.
• Reducing your costs and overheads
• Reducing competition.
• Organic growth, i.e the existing business plan for growth,
needs to be accelerated.
Benefits of a merger or
acquisition

9. DEMERITS OF MERGER AND ACQUISITION
• The first disadvantage of mergers and acquisitions is the price at which these deals happen
because there is no standardized or uniform way in which one can find out the right price
of any company .
• If the company is listed then shareholders may not like the idea because if the company
takes too much debt for the acquisition then it is risky as failure of merger.
• It increased administrative burden because its depending on how you operate a business
you acquire, you will have different levels of administrative strain. for example, if you
buy a competitor and operate it under your name, you will have accounting, human
resources, customer service, information technology and other administrative work to
operate the new location.
• It spoils brand image because it depending on the type of company you buy, you might
damage your existing brand or hurt the new company’s image in the marketplace. for
example, if you own a high-end restaurant and purchase a budget diner, your high-end
customers might no longer see you as a unique, upscale business.