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Merger means any transaction that forms one economic unit from two or more previous ones.
Common Mission: Synergy - that the combination of two businesses can create greater shareholder value than if they are operated separately. There are two basic types of synergy: operating and financial
To help lead the task of integrating companies after big mergers or acquisitions- mid- to upper-level executives relieved of their customary duties for six months to a year
Implementation of this important role often bedevils CEOs, thus that the effectiveness of integration managers varies widely.
How they are seen
Process coordinators or Project managers
Best- Pivotal role, helping mergers to succeed by keeping everyone focused on the issues that have the greatest potential for creating value and by infusing integration efforts with the necessary momentum
Most however never get to assume such a role- Why
CEOs fail to recruit the right people for the job;
integration managers don’t become involved in the
merger process early enough; and CEOs fail to give them adequate support
Reluctant to give up important positions for a 6- to 12-month stint of intense work, at the end of which their previous job may have been eliminated or given to someone else and numerous attractive positions created by the merger will probably have been filled.
CEO should persuade, provide personal assurance and explain importance of the integration management role
Assure them that they will remain in it only as long as they are needed to maintain the momentum of integration
IM should know what position he or she will assume after successfully completing the job
If it isn’t possible to promise a specific one, the CEO should sketch out some realistic possibilities and describe the process for choosing among them as the integration effort unfolds
IM should have a senior-executive sponsor to help with his or her next career move.
IM who has a clear picture of his or her future will also be more effective in the job
The term clean team originated in the health and computer sciences fields, where a designated work environment – a clean room – is sealed off to prevent contamination.
In an M&A context, contamination refers to the disclosure of specific, confidential information that could affect competition between involved companies during the pre-closing period, or in the event the transaction falls through. They can be third party teams.
The clean team – operating under certain protocols and prior to regulatory approval or consummation of the deal – assembles, reviews, and analyzes sensitive, competitive, and other confidential data, then reports summarized or aggregated information to the business leaders, who are then able to make informed decisions about the transaction or the integration of the businesses.
Overcome the urgent technical challenge in path of the merger.
Obtain maximum synergy and minimum customer and employee disruption.
Often the decision makers take one of two questionable paths, some fearing cost and complexity never fully integrate, others in haste choose any one system over the other, alienating both customers and employees.
A question of Pace Rapid Integration Slow Integration Rapid integration garners some immediate synergies, in terms of cost and time. Expensive and delays to capture synergies. Typically drives away 8% customer base (study on banking systems). Less stress on customers and thus very little chance of losing customers. Some dissatisfied employees. Less impact on employees. Immediate benefits are lost due to customer and employee dissatisfactions and the resulting losses. The long expensive process sometimes causes the IT cost to be so high that the merging units falls behind its competitors. SO A TRADE OFF IS NEEDED BETWEEN THE TWO WAYS………..