The PPT is for reference purpose.

1. Strategic Human Resource Management – KMB HR04
Topic: Human Side of Mergers & Acquisitions
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

2. Mergers & Acquisitions
Mergers and Acquisitions (M&A) are defined as
consolidation of companies. Differentiating the two
terms, Mergers is the combination of two companies to
form one, while Acquisitions is one company taken over
by the other.
As an aspect of strategic management, M&A can allow
enterprises to grow or downsize and change the nature of
their business or competitive position. From a legal point
of view, a merger is a legal consolidation of two entities
into one, whereas an acquisition occurs when one entity
takes ownership of another entity's stock, equity interests
or assets.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

3. Human Side of Mergers & Acquisitions
Mergers and acquisitions have become an increasingly
common reality of organizational life. It seems that
almost daily one hears of corporations - some willingly,
some not - involved in such transformation as part of
strategy designed to achieve corporate growth,
economies of scale, vertical integration, diversification,
and even provision of capital for future leveraged
buyouts.
From a human resource point of view, merger and
acquisitions are corporate events that have the
potential to create severe personal trauma and stress
which can result in psychological, behavioral, health,
performance and survival problems for both the
individuals and companies involved.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

4. A proactive strategy for dealing with corporate culture and
human resource issues is fundamental to the success of
mergers and acquisitions. However, these issues are rarely
considered until serious difficulties arise.
According to “Hunt” - the personnel function was involved in
only one-third of all the mergers and acquisitions he studied:
management often fails to acknowledge that culture and
human resource issues can actually cause careful proactive
planning by the acquiring organization to reduce the
emotional fallout can ease the transition and reduce the risk
of failure.
Acquisition managers must recognize that the role of people
in determining merger and acquisition outcomes is in reality
not a soft but a hard issue. Without the commitment of those
who produce the goods and services, make decisions and
conceive strategies, mergers and acquisitions will fail to
achieve their synergizing potential as a wealth-creating
strategy.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

5. The Three Stage Model of Mergers
and Acquisitions
Precombination
Combination
Solidification &
Advancement
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

6. The Three Stage Model of Mergers and
Acquisitions
The Three Stage Model for M&As has been presented in
detail by Habeck et.al. 1999. These three stages are:
(i) Pre-combination: Pre-combination refers to processes
that take place before the M&A is completely legal. A
justification is presented, as well as a plan on looking for
partners in the venture, searching for possible
alternatives, and finalising how the M&A will take place.
This stage sets the foundations for all activities carried
out in stages 2 and 3. Planning is key.
As discussed by Habeck et al (1999), underperforming
M&As result from poor planning in stage 1 in about 80%
of cases.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

7. (ii) Combination (involving the integration of companies):
This stage is focused on combining and integrating the
companies. Schuler et al (2004) outlines four approaches
involved in this stage: portfolio, blending, new creation and
assimilation. In the portfolio approach, the managers in the
original companies retain a large degree of autonomy. Things
carry on largely as they did before the M&A, with the acquired
company functioning as an autonomous subsidiary. Blending
incorporates the best features of each individual company and
forms a new unified organization. New creation involves the
formation of a new company that is completely different than
the original partners. Finally, assimilation refers to the
complete takeover and control of the target company, an
approach typified by General Electric and Siemens.
(iii) Solidification and Advancement (which forms the new
entity): This stage involves solidification and assessment of
the new entity. This stage includes fine-tuning as the M&A
takes shape.
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW