Human Resource Management Role in Change Management

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TABLE OF CONTENTS

2.1 Merger and Acquisitions1

2.1.1 Definitions1

2.1.2 Benefits1

2.1.3 Types2

2.1.4 Problems3

2.1.5 Corporate Cultures3

2.1.6 Stress4

2.1.6 Resistance to Change5

2.1.7 Image, Identity and Confidence6

2.1.8 Communication8

2.1.9 Turnover9

2.1.10 Mergers and Risk9

2.1.11 Factors behind failure of Mergers and Acquisitions10

2.1.12 Differences between Mergers and Acquisitions11

2.1.13 Cross-Border Acquisitions11

2.1.14 International Mergers and Acquisitions12

2.2 Impact on the Employee of the Company being Acquired13

2.2.1 Mergers and Acquisitions13

2.2.2 The Post-Acquisition Process And Its Effect On Employees13

2.3 Impact of Mergers and Acquisitions on Organizations15

2.4 Management Implications/Challenges To Both Acquiring And Acquired Firms18

2.4.1 Challenges of Management in Mergers and Acquisitions18

2.5 Human Resources and Acquisition of Small Firms19

2.5.1 Trust and Communication21

2.6 Importance of Change Management in Acquisition of a Firm22

2.7 Organizational Culture during Mergers and Acquisitions24

REFERENCES26

LITERATURE REVIEW

2.1 Merger and Acquisitions

2.1.1 Definitions

Merger is a formal process of two or more firms getting into a union to form into a single entity for the assets and liabilities transferred by the selling firm and absorbed by the buying firm. In mergers shares transferred (DiGabriele 2008 -424).

Takeovers or Acquisition occur between the target organization and the bidding organization. There might be friendly or else hostile takeovers (Dranikoff 2002 75). In the act of acquisition, the bidder company might purchase the assets or the shares of the company which is targeted.

2.1.2 Benefits

Even after a century of debate, Merger and Acquisition (M&A) waves remain a mystery to economists, sociologists, finance scholars and strategists alike. M&A waves as one of the ten most important unsolved questions in financial economics. Various explanations for their occurrence have been suggested, such as capital markets drivers, technological innovations, firm securities misevaluations, corporate board interlocks and managerial responses to performance feedback. While each of these accounts has merit, they emerge from competing theoretical paradigms, and provide only partial explanation, as they do not explain why waves keep coming back.

Mergers and acquisitions have an economic, social and most of all financial benefits. Mergers and acquisition creates synergies for companies that help them to increase their productivity and to obtain results that these companies were unable to obtain without merging. Asset swap mergers and acquisitions assist the organisations to dispose off the parts that are no longer required by them. This helps the organisations to enter in to area of another product and market. Merger establishes a bigger company by combining two companies. Mergers that are done using asset swap have an advantage that the risk is mitigated by the shareholders equally by the shareholders of both the organisations.

2.1.3 Types

Mergers can be classified as Vertical Mergers, Horizontal Mergers and Conglomerate Mergers. Some of the main motivations for Mergers are, Economies of Scale, Economies of Scope, Complementary Resources, Industry Consolidation, Diversification, Increasing Earnings per Share, Lower Financing Costs etc.

This is in order to avoid anxiety and worries among the employees, but will often generate the opposite effect. It is established that people generally expect coming changes after being acquired. Hence, if it is declared from top management that nothing will change, the employees will suspect that some information will be withheld ...