The document discusses HR issues in mergers and acquisitions. It defines mergers as occurring between equal-sized organizations that unite under a new entity, while acquisitions involve a large company purchasing a smaller one. Mergers can be horizontal between similar industries, vertical between different production stages, or conglomerate between unrelated industries. Successful M&As require retaining key talent, effective communication, executive retention, and cultural integration. Cultural and people issues like composition of boards, job placements, culture integration, and talent retention are also important factors that impact cross-border M&A deals.

1. HR Issues in Mergers & Acquisitions
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)
Professor
Al-Qurmoshi Institute of Business Management,
Hyderabad - 500005
1

2. 2
A merger occurs when two organizations of equal
size unite to form a new unit
Mergers are usually voluntary and involve stock
swaps or cash payments to the target
Amalgamation is a another term used to describe a
merger, but usage is confined to accounting subject
Nature of Mergers & AcquisitiNature of Mergers & Acquisitionsons

3. 3
MergersMergers
Mergers may beMergers may be
Horizontal Merger: when two organizations
producing a similar product combine.
Vertical merger: when two organizations working
at different stages in the production of the same
product combine.
Conglomerate mergers: when two organizations
operate in different industries.

4. 4
AcquisitionAcquisition
Acquisition takes place when a large company buys
out a small unit or vice versa.
The small unit loses its identity and it becomes one
with the large company, which continues to function
in its name.
Where the buyout is forced on the target, it
becomes a hostile take-over

5. 5
Motive behind M&AMotive behind M&A
M&A are preformed in hope of realizing economic gains
To provide improved capacity utilization
To make better use of the existing sales force
To reduce managerial staff
To gain economies of scale
To smooth out seasonal trends in sales
To gain access to new suppliers, distributors, customers, products and
creditors
To gain new technology
To reduce tax obligation

6. 6
Pitfalls of MergersPitfalls of Mergers
Undue focus on financial aspects
Employees lose personal effectiveness as a result of
rumours, misinformation and worry
Infrequent and irrelevant communication
Perceived lack of authority and understanding of
the employee when the ‘new’ organization forms
Leadership changes and failure to communicate
the vision and goals to the employees

7. 7
People-related factors that contribute toPeople-related factors that contribute to
acquisition successacquisition success
Retention of key talent
Effective communication
Executive retention and
Cultural integration

8. 8
Cultural & People Issues
Cultural & people issues that have a major
impact on success/failure of cross-border M&A
deals:
Composition of new board
Who will occupy which job?
Integration of culture
Undertaking a human capital audit and selecting the
management team

9. 9
Cultural & People Issues (Contd.)
Effective communication
Retaining talent & creating new culture
Aligning performance evaluation & reward
systems
Managing the transition
Integration

10. 9
Cultural & People Issues (Contd.)
Effective communication
Retaining talent & creating new culture
Aligning performance evaluation & reward
systems
Managing the transition
Integration