Merger and acquisition

Download Merger and acquisition

Post on 23-Dec-2015

3 views

Category:

Documents

0 download

Embed Size (px)

DESCRIPTION

Merger and acquisition

TRANSCRIPT

PowerPoint Presentation

Role of HR in Mergers and AcquisitionsSection D, Group 3:

PGP/18/178AKSHEY BHOGRAPGP/18/180AMRITANSHU ROYPGP/18/194KANDIRAJU KRISHNA SINDHUPGP/18/195KARIDI SIDDHARTHAPGP/18/217SAURABH AUDICHYAPGP/18/227VED PRAKASH JNANESWARPGP/18/229YATIN SHARMA

MERGERS AND ACQUISITIONSMergersTwo companies mutually agree to merge when they feel they can do something together that they could not achieve on their own.

AcquisitionAnacquisitionis 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.TypesHorizontalVerticalConglomerate

STRATEGIC MANAGEMENT

CORPORATE FINANCE

HR MANAGEMENT

WHY M&A?

People Cost Aspects Usual focus on financial liabilities and neglect of people cost liabilities Underestimated obligations which are not immediately apparentStructural Aspects Absence of good organizational design ambiguous goals, lack of role clarity, inefficient decision making Alignment of structure, process, governance, metrics, people to fulfil the methodology of newly integrated company Work structure, information flow, KPA re-definition, right-sizing

TALENT RISKSCULTURE RISKS

A likely cause of the trouble is culture clash. In a Bain survey of executives who have managed through mergers, that was the No. 1 reason for a deals failure to achieve the promised value.6

Regulatory AspectEngagement AspectLaws affecting human capital might vary from place to placeLabor laws and HR contracts with unions are a major area of concernThis is a sensitive issue can make/break a deal especially in manufacturing and other such labor heavy industries

Job losses, restructuring, imposition of a new corporate culture and top leadership changes may lead to reduced engagement levelsDisengaged and on the fence employees back hold on extra effortREGULATORY ASPECTS

HUMAN RESOURCE BEST PRACTICES M&A

Involving HR in early Merger discussions: HR staff should conduct cultural audits to ensure that the organizations are compatible. If there are discrepancies in management styles, corporate values, or organizational structures, HR practitioners can provide recommendations as to how the companies can overcome their differences and establish a common culture Human Resources evaluation prior to integration: Conducting quick assessments to identify who are the keepers and determine the actions necessary to retain the talented individualsIdentify gaps in talent and nurture and coach employees so as to avoid impeding of management succession

Increasing Communication: Organizations should inform all employees concurrently or in advance of any press release or radio announcement of merger plans This will avoid the negative effects of rumours and gossip which tend to distort or misrepresent realityOpen and honest communication tends to explain the employees the reasons for the mergers and their own position after the merger

Stress reduction through employee assistance programs: Employee assistance programs help employees to manage post merger stressCounselling to employees helps them assess career opportunities and preview future alternatives

Policies and processes: Compare and study HR practices of both the companies and identify sources of differences between themEnsure minimum loss to employees on account of change in policies

Informing employees about Downsizing and Staffing in advance: Information about downsizing and staffing should be openly and honestly communicated to the employees as soon as possible Employees experience more stress and anxiety when they are uncertain about their futureResulting decrease in morale and productivity and an increase in turnover and absenteeism Facilitating in development of new organizational structure: HR personnel should ensure that a new organizational structure is developed Clear well-defined reporting relationships are established as soon as possible. Compensation: Determination of compensation comparisons between the companies must be doneCompensation should be based on criticality of function and skills and knowledgePost merger some job may not be as critical as they were previouslyDevelop and deliver clear compensation guidelines through one on one interactions with functional managers Identifying Leadership: Clearly specifying the leadership roles in the merged entity and removing any ambiguityThis helps to make transition smoother Job Grading/ Banding: Perform a competency assessmentPay attention to organizational culture and willingness of the leadership to implementDifferences in number of job grades must be properly accounted for keeping in mind the sensitivity of this issue

EXAMPLES OF M & ASuccessfulUnsuccessfulDisney and PixarDaimler Benz and ChryslerExxon and MobilSears and KMartTata Motors and JLRAOL and Time WarnerArcelor MittalQuaker and SnappleHindalco and NovelisHP and Compaq

Source: http://www.cnbc.com/id/34467713

EXAMPLES OF M & ASuccessfulUnsuccessful

Disney acquired Pixar in $7.4 Bn in 2006The addition of Pixar significantly enhances Disney animation, which is a critical creative engine for driving growthDisneys animated films were failing at the box officePixar had a creative engine while Disney had the distribution channel and scaleThe deal proved to be a success with Disney establishing the market leadership

The Daimler-Benz merger with Chrysler in 1998 is probably the most famous of all international mergers then ended in failureHow much money was paid by Daimler for Chrysler in 1998? $38 billion How much money paid by Cerberus Capital for Chrysler in 2007? $7.4 billion

Examples of M & A: Analysis from HRM PerspectiveSuccessfulUnsuccessful

http://www.thewrap.com/frozen-pixar-disney/http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdfhttp://www.kwintessential.co.uk/resources/daimlerbenz-chrysler-merger.htmlhttp://www.wsj.com/articles/SB964560646863325466http://www.nytimes.com/2008/06/01/business/media/01pixar.html?pagewanted=all&_r=0http://community.mis.temple.edu/laurenpatterson/files/2014/03/walt-disney-pixar-case-analysis.pdfhttps://hbr.org/2014/04/managing-creativity-lessons-from-pixar-and-disney-animation12

KEY TAKEAWAYS

CONCLUSION

THANK YOU