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Mergers

Ritasha (chartered accountant) (356 Points)

25 April 2010

Anybody having information about WHY MERGERS FAIL?I need a project report on this subject.

Thanks in advance

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drsastry (CA) (23 Points)
Replied 26 April 2010

Mostly Merger is the eventual out come of an Acqusition or Take over. Need less to say that all Acquisiton / Takeover, cases shall not end up, or rush up with Merger. The following parameters have to be reviewed, contemplated before finalizing the merger decision:

1. How the two entities complement with te respective business verticles.

2. Are there any prossiblities of reducing the over heads, by combining both the sevice departments, and reducing the duplicate facilities across the board. Viz. Logistics Department, Sales, Purchase Department, Software Licenses etc.

3. Employee Work Culture, this is most important of all, there should be semblance between the Human Capital of both the organization, in terms or their work culture, attitude and style of funtioning.

4. Mergers yield results only when contemplated, synergies, crystallize in savings to the merged units,, and the for this lot of leg work needs to be done,

a) Managing the HR issues, progression plan and incentivizing the perfoming employees shall be speld out clearly

b) Employee Promotion relating to normal progression plan got to be clearly laid down, so that none of the continuing employees should have any concerns about their future.

c) providing them the confidence that there will not be differential treatment, among the employees from the erstwhile two entities.

If the newly formed entity after merger addresses these aspects carefully, definitely there would be cost saving and eventual better botton lines, is not a mirage.

d.r.sastry, FCA